Royal Assent

Lord Irvine of Lairg: My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
	Financial Services and Markets Act,
	Railtrack (Waverley Station) Order Confirmation Act.

Mature Students: Financial Provision

Lord Dormand of Easington: asked Her Majesty's Government:
	What plans they have to increase financial provision for mature students wishing to undertake degree courses at universities.

Baroness Blackstone: My Lords, we have made mature students, especially those with children, a priority. We are introducing measures to give them more financial support, including bursaries of up to £1,000, paid according to need, a means-tested school meals grant and, from September 2001, a childcare grant based on actual costs. All of these will be disregarded for benefits purposes. We are also this year raising the income threshold at which mature students have to contribute towards their tuition fees.

Lord Dormand of Easington: My Lords, I thank my noble friend for that helpful and promising reply. Can she confirm that the extra money made available earlier this year for mature students was directed towards those universities offering part-time courses with a vocational focus? I do not disagree with such a policy, but does my noble friend accept that many people wish to undertake full-time university courses over a wide spectrum of study. Can she confirm that the policy I mentioned in my first supplementary question will not be implemented at the expense of the kind of course I have just mentioned?

Baroness Blackstone: My Lords, in my initial Answer I referred to the position as regards support for full-time students. After all, it is full-time students who gain full access to the student support regime. However, the Government have decided to make it possible for part-time students also to gain access to the loan system. Part-time students on low incomes will be able to take out a loan of up to £500 a year.

Baroness Blatch: My Lords, why is it that students undertaking Bachelor of Education degree courses are treated so unfavourably when compared with those undertaking a PGCE course after completing their first degree? It seems only fair that B.Ed students should qualify for at least equal treatment with anyone else who chooses to go into teaching.

Baroness Blackstone: My Lords, the noble Baroness, Lady Blatch, has asked about this on previous occasions. The reason for treating PGCE students in a particular fashion is to tackle the problem of shortages of secondary school teachers in certain subjects. Most students studying for a Bachelor of Education degree will in due course become primary school teachers, where the shortages are not as acute as in secondary schools. That is the reason for the different treatment.

Baroness Sharp of Guildford: My Lords, I was pleased to hear the Minister mention in particular the costs of childcare. Does the Minister agree that women returning to higher education after having children often face difficult problems as regards childcare because many institutions do not have creches where young children can be looked after? Does the Minister have any solutions that would address this problem?

Baroness Blackstone: My Lords, I agree entirely with the noble Baroness, Lady Sharp. We must do all that we can to help women with children, in particular single parents, to secure the qualifications they need in order to get well-paid jobs. They will then no longer be dependent on the state. For that reason, among others, we have introduced these improvements for mature students, with a special emphasis on mature students with children. So far as concerns creches, it is for the universities themselves to decide on their arrangements for the provision of on-site daycare facilities. However, I think that the vast majority of universities now provide creches and give priority to students with particular needs, such as single mothers or, indeed, single fathers.

Lord Dormand of Easington: My Lords, can my noble friend tell the House whether the disabled student's allowance has been assessed as regards its effectiveness in assisting disabled mature students?

Baroness Blackstone: My Lords, I do not believe that a specific study has been carried out into the effectiveness of the disabled student's allowance as it affects mature students. However, the Government have expanded the provision of DSAs to include part-time students because many mature students study part time. This is the first time that that has happened. I can also tell my noble friend that the Government are making DSAs available for postgraduate students.

Toll Charges: VAT

Lord Islwyn: asked Her Majesty's Government:
	Whether they have any plans to introduce VAT on toll charges.

Lord McIntosh of Haringey: My Lords, the issue of whether to charge VAT on toll charges is presently the subject of proceedings before the European Court of Justice. HM Customs understands that the judgment of the court is not due until 12th September.

Lord Islwyn: My Lords, has the Minister noted the judgment of the Advocate General to the effect that, because the United Kingdom failed to impose VAT on tolls, it has as a result failed to meet its obligations under EC treaties? The Advocate General has ordered that the outstanding VAT should be paid retrospectively back to 1994, together with interest charges. Does the Minister appreciate that when I raised this issue a few years ago--I was concerned about the grave effects the imposition of such charges would have on the Severn bridges, the lifelines of Wales--I was told by the then Transport Commissioner, Mr Neil Kinnock, that the fears I was expressing were part of the Euro myth? Does the Minister agree that the reality is now a little different? Furthermore, is it not time for us to stand up to those faceless bureaucrats in Brussels?

Lord McIntosh of Haringey: My Lords, my noble friend uses language that I am more used to hearing from the Benches opposite. The Advocate General delivered his written opinion to the court on 27th January, but the final decision is before the court. We understand that it will be delivered on 12th September. My noble friend is right: the opinion of the Advocate General was that all toll charges should be subject to VAT, but that, because of delays in consideration of the matter by the Commission, arrears should be paid over a period of only four years rather than over the full period from the time the matter was first raised by the Commission.

Lord Renton: My Lords, do the Government believe in freedom of movement for workers, holidaymakers and tourists? Is the Minister aware that the imposition of these charges would mean interference with freedom of movement and would add to its cost?

Lord McIntosh of Haringey: My Lords, the only tax imposed in this country which is subject to European law is value added tax. Consistency between countries in the way in which value added tax is imposed is a matter of European directives, to which we have signed up in the form of primary legislation.

Lord Stoddart of Swindon: My Lords, is my noble friend aware that I could not possibly better the splendid denunciation by my noble friend Lord Islwyn of the faceless bureaucrats in Brussels? Is it true that the Government have merely expressed disappointment at the Advocate General's ruling? Would it not be better if they expressed outrage? Would it not dish the Commission, the Advocate General and the European Court if we used some of the new telephone licence money to abolish toll charges, not only on the Severn Bridge but on every other bridge and road in the United Kingdom?

Lord McIntosh of Haringey: My Lords, the Government have done a great deal better than object to the opinion of the Advocate General--it is an opinion, not a ruling; the final decision is with the Commission. The Government argued strongly before the European Court in November last year when the issue was before the court that VAT should not be charged on tolls. We did so on the basis that nearly all the tolls in this country are operated by local authorities as a statutory duty and, therefore, should not be, and never have been since 1973, subject to VAT. A difficulty arises with tolls such as those on the second Severn crossing which are privatised. The argument is much more difficult to sustain in those circumstances.

Lord Roberts of Conwy: My Lords, if the Government are faced with an adverse judgment in the European Court, will they consider lowering the charges, because traffic levels on the Severn crossing are rather higher than expected, and in view of the fact that, as the noble Lord, Lord Islwyn, said, this is Wales's lifeline?

Lord McIntosh of Haringey: My Lords, if the noble Lord refers to the second Severn crossing, the toll charges there have been a matter of agreement between the Government and Severn River Crossing plc. It is primarily a matter for the company to decide the charges in accordance with that agreement. A difficulty arises in relation to some crossings, in that there is a limit to the increase in charges, and that is true of both Dartford and the Severn. Any annual increase is restricted to the increase in the retail prices index. That may prove a difficulty which will have to be faced if and when the European Court of Justice finds against us.

Lord Berkeley: My Lords, do the French and Italian Governments pay VAT on the tolls on their motorways, some of which are privatised and some of which are state-owned? Are they, too, subject to the future ruling in the European Court? Secondly, if the Commission is proposing VAT on road tolls, is it proposing VAT on bus and train fares, Underground fares, air fares or any other kind of travel within the Community?

Lord McIntosh of Haringey: My Lords, the answer to the second question is no. The answer to the first is that the Commission's action before the European Court of Justice will relate to all those countries, including the UK, France, Holland, Ireland and Greece, which charge tolls on roads.

Lord Pearson of Rannoch: My Lords, in view of the European Court's record of agreement with the opinions of the Advocate General, can the Minister tell the House with what confidence he faces the prospect that on this occasion the court may disagree with the Advocate General?

Lord McIntosh of Haringey: No, my Lords, I have no insight into the minds of those at the European Court of Justice. As a matter of historical fact, the noble Lord is right. The court usually, if not always, agrees with the opinions of the Advocate General.

Lord Crickhowell: My Lords, is it right that other countries are also opposing this action in Europe? Is it not right that it would apply to the first Severn crossing as well as the second Severn crossing? The Minister referred only to the second Severn crossing; they run in tandem. Will the Minister be kind enough to place in the Library the detail of all those tolls in Europe where this practice is followed, and the way in which the VAT is applied? We can then see what is happening in other countries and what is proposed in this country.

Lord McIntosh of Haringey: My Lords, I can undertake to do that as regards this country, or to answer a Written Question if that would be more appropriate. I am doubtful whether we could collect the information for other European countries.

The Earl of Northesk: My Lords, presumably the Treasury has done some research on how much such charges would cost the UK taxpayer. Perhaps the Minister can share that information with us.
	If the proposal is upheld by the ECJ do the Government intend that relevant local authorities should be forced to levy an additional 17.5 per cent on their bridge tolls?

Lord McIntosh of Haringey: My Lords, it is not a question of how much it would cost the taxpayer. If we take the issue literally, I assume that both local authorities and publicly and privately owned toll roads and bridges would wish, if they could, to increase their charges to cover the VAT so that it would cost the taxpayer nothing. Those are matters which will have to be dealt with on a case by case basis.
	I am not sure whether it is clear to noble Lords who talk about the cost to this country, in particular to business and industry, that all commercial traffic and passenger vehicle traffic by business motorists would be able to recover their VAT by keeping their receipts and entering them in their VAT returns.

Lord Mackay of Ardbrecknish: My Lords, may I seek to be helpful to the Minister? Perhaps he can suggest to his right honourable friend the Chancellor of the Exchequer that additional charges resulting from a judgment of the European Court about VAT on the Forth road bridge used by many of his constituents would not go down very well in that part of Scotland.

Lord McIntosh of Haringey: My Lords, the spoon with which I have supped with the noble Lord does not grow any shorter! I am sure that the Chancellor of the Exchequer is well aware of these matters.

Inter-Governmental Conference: Nice

Viscount Waverley: asked Her Majesty's Government:
	When the agenda will be agreed for the Inter-Governmental Conference in Nice.

Baroness Scotland of Asthal: My Lords, we expect the European Council in Feira on 19th and 20th June to confirm that the IGC agenda should remain focused on the institutional changes necessary for enlargement, and that negotiations should be completed this year. In addition, the presidency will report on discussions so far and recommend the inclusion of a few additional agenda items. We expect these to include areas such as reform of the European courts, the composition of the Community's other institutions and bodies, and closer co-operation. We are content to see these issues on the agenda.

Viscount Waverley: My Lords, how can the United Kingdom's European participation be considered to be impacting centre stage when it quite manifestly is not, given our current approach? Why is our reputation with our partners, the Commission and, most importantly, the British electorate seemingly being diminished by a creeping on-off engagement without consistent arguments being articulated before what will be the most draconian Summit since Maastricht?

Baroness Scotland of Asthal: My Lords, I am surprised that the noble Viscount should so describe the IGC. I cannot join with him in his assessment. Our reputation has not been diminished. Britain has very much gone to the core of Europe. We are extremely well respected. The IGC agenda is clear. That agenda has been well established. It has been agreed. Provision was made for the inclusion of a few related additional matters. These have now been thrashed out.
	This IGC is very much on course. We are dealing with precisely the issues that Britain wanted to be dealt with. We are confident that we shall be ready and able to deal with those issues in a productive way.

Lord Willoughby de Broke: My Lords, is it correct that the French Government wish to put the charter of fundamental human rights on the agenda? Do the British Government agree that that should be part of the treaty?

Baroness Scotland of Asthal: My Lords, I hope that we shall have an interesting debate on the charter of rights on Friday when I am sure I shall be able to expand more fully on the subject. I make clear that Her Majesty's Government welcomed the opportunity to raise the visibility of those rights. The charter should preserve the legal certainty, including full consistency with the ECHR, stick to existing rights, and be consistent with other EU policies and objectives. At present we do not see that this charter should be anything other than a declaratory charter. We think that this is the best way to raise visibility while maintaining legal certainty.

Lord Stoddart of Swindon: My Lords, the Minister will surely agree that the agenda that she would favour is completely different from the agenda that Mr Joschka Fischer wants. Has my noble friend read his speech of 12th May to Humboldt University entitled From Confederation to Federation? It sets out clearly the German point of view--it is not a personal point of view--towards a country called Europe stretching from the Urals to the Atlantic. Can the noble Baroness emphatically disagree with that view and give some leadership to the other countries which do not see the German-French axis vision of Europe as they do?

Baroness Scotland of Asthal: My Lords, Mr Fischer made clear that he was speaking in a personal capacity, and not as Foreign Minister nor as a representative of the German Government. We welcome his contribution to the debate on the future of Europe, which sets out some familiar views. We can support some elements of his speech. For instance, we support his emphasis on the need for early enlargement and his recognition that political integration should not go against the grain of the national institutions and traditions. But clearly we do not share his view on the EU constituent treaty or a full parliamentary federation. We want a united Europe of states not a united states of Europe. It is right to remember that France, too, has welcomed his view and expressed interest, but no more.

Lord Howell of Guildford: My Lords, I fully understand that the agenda for the conference has not been finalised, let alone the agenda for the subsequent treaty of Nice. However, is the Minister aware that some of us are beginning to feel a shade misled by the propaganda about the nature of the conference--not by the noble Baroness, I hasten to say, but by government spin generally? We have been told again and again that it is a tidying-up conference; that it is tightly focused; and that it is all about the Amsterdam left-overs and the housekeeping needed for enlargement. But it has become plain that it is a conference about the major issues affecting the future of Europe and its shape. It is becoming a Christmas tree on which everyone hangs their favourite cause in relation to European reform.
	The Minister referred to a tight focus for the conference's agenda.

Noble Lords: Question!

Lord Howell of Guildford: How can that be reconciled with the apparent push to put on the agenda defence issues, the question of enhanced flexibility and co-operation and the charter of fundamental rights? How can it be reconciled with the view of Commissioner Verheugen that EU institutions are having heart failure? These are enormous issues. I do not believe that they should be suppressed.

Noble Lords: Speech!

Lord Howell of Guildford: It is time that the Government took a lead in debate instead of pretending that nothing very important is happening.

Baroness Scotland of Asthal: My Lords, I shall say as clearly as I can that the statements made by this Government in relation to the focus of the IGC remain true. We cannot account for others who may ill report that which is in fact happening. But we have kept it focused. The noble Lord will know that it is of incredible importance for us to be ready by 2002 for the prospect of enlargement. The issues to be dealt with by the IGC are to that end.
	Of course additional matters will be discussed but that is what it will be--a discussion. There is no indication that we shall go outside that which I have told the House on other occasions or what I have said today.

Lord Roper: My Lords, the Minister will know of the interest on these Benches in the progress on defence, made last year at the Helsinki and Cologne summits. Will she confirm that the Council's legal advisers have ruled that there will be no need for any treaty amendments and that therefore that item need not feature on the IGC agenda?

Baroness Scotland of Asthal: My Lords, I believe that the noble Lord is right. There is a clear view that a treaty amendment is not necessary and, to the best of my knowledge and belief, it does not form part of the IGC.

Lord Pearson of Rannoch: My Lords, is it not true that the Government's own White Paper--

Noble Lords: Next Question!

Millennium Bridge

Lord Luke: asked Her Majesty's Government:
	Whether they would support the spending of additional lottery money to stabilise the Millennium Bridge.

Lord McIntosh of Haringey: My Lords, like all lottery distributors, the Millennium Commission is independent of government. The Millennium Commission has contributed just over £7 million to the construction of the bridge. While the project engineers work to solve the problem with the bridge, it seems pointless to speculate as to whether the Bridge Trust will seek further funding from the Millennium Commission. Any application for further funding from the Millennium Commission would be considered on its merits.

Lord Luke: My Lords, I thank the Minister for that Answer. If by chance more money is required, will it come from the taxpayer or directly from the lottery?

Lord McIntosh of Haringey: My Lords, I have already said that it would be pointless to speculate as to whether the Bridge Trust will seek further funding. If it did so, no doubt it would be from the Millennium Commission, as I said in my original Answer.

Baroness Trumpington: My Lords, if the people who constructed the bridge have made a mistake is it not up to them to pay?

Lord McIntosh of Haringey: My Lords, that may be a matter of debate and subsequently of legal opinion. However, it all depends on what the cause is found to be as a result of the engineering investigation.

Lord Mackay of Ardbrecknish: My Lords, when I fly in an aircraft I try to do so on one that has not been designed by an architect. Would it not have been more sensible if the bridge had been designed by a bridge engineer?

Lord McIntosh of Haringey: My Lords, the bridge design was based on a concept by a sculptor, Sir Anthony Caro, and not an architect. I do not believe that the noble Lord, Lord Mackay, would fly in an aircraft designed by a sculptor.
	There are different views on these matters. I remember that during my childhood in Scotland I really enjoyed going on what we called a shoogly bridge. Some of us would enjoy going on a bridge which was not entirely static, but I can see that safety considerations might lead to a different opinion.

Lord Tordoff: My Lords, is it not preferable to have a bridge that wobbles rather than a bridge that is rigid and breaks?

Lord McIntosh of Haringey: My Lords, I rather think so. The evidence of the Tacoma Narrows bridge points to that.

The Lord Bishop of Southwark: My Lords, will the Minister ensure that when the bridge is reopened it is possible to travel from south to north of the river and not in the opposite direction? Those of us who live south of the river occasionally like to travel north, not least to debate in your Lordships' House.

Lord McIntosh of Haringey: My Lords, surely, the right reverend Prelate would want to have City persons joining his congregation at Southwark Cathedral.

Lord Davies of Oldham: My Lords, we recognise that it is the function of the Opposition to criticise, and we are used to their knocking copy about various aspects of the millennium development. However, is it not the case that future generations will delight in the bridge, the London Eye and the Dome?

Lord McIntosh of Haringey: My Lords, I believe that the bridge is wonderful. It is outstanding among the many wonderful structures being built in London and throughout the country this year. I believe that all will survive both physically and in our memories for a very long time to come.

Lord Brougham and Vaux: My Lords, I agree with the Minister that the bridge is attractive, but can he tell the House why the three millennium projects have all gone wrong? Is it something to do with 10 Downing Street?

Lord McIntosh of Haringey: My Lords, I am not sure to which three millennium projects the noble Lord is referring.

Lord Brougham and Vaux: My Lords, I was referring to the wheel, the Dome and the bridge.

Lord McIntosh of Haringey: My Lords, the noble Lord is just plain wrong. In any case, the London Eye is not a millennium project but a British Airways project.

Criminal Justice and Court Services Bill

Brought from the Commons; read a first time, and to be printed.

Business of the House: Debate this Day

Baroness Jay of Paddington: My Lords, I beg to move the Motion standing in my name on the Order Paper.
	Moved, That the debate on the Motion in the name of the Lord Baker of Dorking set down for today shall be limited to five hours.--(Baroness Jay of Paddington.)

On Question, Motion agreed to.

Higher Education

Lord Baker of Dorking: rose to call attention to the state of higher education in the United Kingdom; and to move for Papers.
	My Lords, I asked for the debate before the Chancellor of the Exchequer made his infamous remarks about Magdalen College, which happens to be the college I went to. Therefore, I shall turn to that matter later. I wanted to give your Lordships an opportunity to examine the crisis facing higher education in our country. "Crisis" is not an exaggeration. Nearly every academic one talks to admits that the quality of education in our universities is declining. They say that in private, but very few say it in public.
	Mr Robert Stevens, the Master of Pembroke College, Oxford, and the Visiting Professor of Law at Yale University, wrote in the Financial Times only a few weeks ago that,
	"the quality of research and teaching in English universities is declining. This deterioration will gather pace unless funding, either public or private, is considerably enhanced".
	That is not just one view from the ivory towers of Oxford. During the past two years, the Government have received three reports. The latest is the one commissioned earlier this year by the Committee of Vice-Chancellors and Principals, the Higher Education Funding Council and the SCP. They all say the same thing; that the quality of education in our universities is declining because of their inability to recruit and retain staff. They say that the infrastructure of our research base is deteriorating. They say that more than one-third of academics in this country are over the age of 50. Young graduates are not being attracted into the profession in the numbers that are required. For the fourth year running, the numbers applying to take a Doctor of Philosophy have declined.
	All that comes from a Government who boast that they want to create a knowledge-based economy. The knowledge base is in the heart of our universities. When the Government use that phrase they demonstrate yet again that they are a Government of adjectives and not a Government of achievement.
	The crisis is particularly acute as regards academic salaries. At present, 70 professorial posts are unfilled. Warwick, one of our elite universities, cannot appoint a Professor of Economics because no one of sufficient calibre has applied. During the past two years, one of our older universities advertised 13 professorial posts. It appointed six, but during the same time six resigned, amounting to a standstill.
	Yesterday I spoke to Professor Peacock, the Waynfleet Professor of Metaphysical Philosophy at Oxford. Next month he is going to New York University. Professor Martin Davis, another Oxford philosopher, is going to Australia. Professor Higginbottom, also an Oxford Philosopher, is going to Southern California. That is what is happening in just one discipline--an important one but with no great numbers--at one university. So the brain drain is well under way--and it is one way only. It is almost impossible to attract scholars of international standing to this country. They like working here, they like the atmosphere, but they are not prepared to take the financial penalties that they would bear.
	The greatest difficulty in recruitment is in accountancy, engineering, computer-science, business, law, nursing and maths. In a careless reply in this House a few weeks ago, the noble Baroness dismissed this as,
	"small difficulties in some scientific areas".--[Official Report, 23/5/00; col. 632.]
	The difficulty goes much wider than that. And it is not surprising that there is a difficulty. Since 1981, academic pay has risen in real terms by just 1 per cent compared with an increase in wages and salaries since then of our general society of 40 per cent. The increase among professionals is even higher. Therefore, there is a very real crisis in pay. A graduate lecturer's starting salary is £16,000 per annum. With a bit of luck, by the age of 28 he or she might be earning £24,000. That is a very poor reward and it is why so many of them are finding it extremely difficult to accept a career in education in this country.
	When it comes to professors, the professorial minimum in this country is £38,000 a year. The standard salary for an Oxford professor is £41,893. The department of the noble Baroness has four special advisers: two of them are paid up to £46,000 a year and one is paid up to £61,000 a year. Therefore, the clear lead given by this Government is that spin doctors are more valuable than professors. That is unacceptable.
	When great institutions decline, they do not decline precipitously; there is no precipice. They simply decline very slowly. Higher education in this country is now heading down that slope and I believe that the Government are doing very little to arrest the decline. In her wind-up speech tonight, the noble Baroness will point out that the Government have increased the funding of higher education up to the year 2002 by 11 per cent in real terms. That is simply not accepted by the university world.
	When I became Secretary of State for Education in 1986, the average teaching expenditure per student in the universities was £8,500; it is now approximately £4,000. That is a real-terms cut. I believe that the proportion spent on higher education by this Government is disgraceful. I asked the Library to check with the noble Baroness's department the answers given by the Government in this House. Therefore, there should be some semblance of reality and truth in the figures that I give.
	The proportion of GDP that the Government will spend on higher education this year is 1.12 per cent, including salaries. That is well below the OECD average; in fact, it is the lowest figure of any OECD country. America spends nearly three times as much on state education. The average spent during the 18 years of Conservative government was 1.22 per cent of GDP. The Government have spent 1.12 per cent this year; in the 18 years of Conservative government, the average was 1.22 per cent. Therefore, Gordon Brown is spending a lower proportion of our GDP on higher education than did Kenneth Clarke, Norman Lamont, Nigel Lawson and Geoffrey Howe. I do not know whether my noble friend Lord Lawson was so generous, but he should take some credit for that.
	In order to catch up with the Tory average of 1.22 per cent, the Government should increase expenditure this year--I am talking about the year 2000--by £800 million from £10.1 billion to £10.9 billion. That happens to be very close to the figure that the Committee of Vice-Chancellors and Principals is asking the Government for. The noble Baroness is currently engaged in discussions with the Chancellor of the Exchequer on the whole question of her expenditure programme. Unless she increases it by £800 million a year--that is standstill extra--she cannot talk of a real increase. That is the challenge that faces the Government.
	This year some universities have experienced a real-terms cut in their budgets. Thames Valley has had a cut of 14 per cent; Sussex, 2 per cent; Oxford, 1 per cent; and Cambridge, 0.3 per cent--a bit of spite there! I had a look at Birkbeck College, which was headed by the noble Baroness. Its budget is approximately £20 million this year and it has received an increase of £250,000. That is a real-terms cut of 1.2 per cent. If I had inflicted that upon her when she was the head of Birkbeck College, she would have stormed into my office and accused me of being a mean-spirited, Thatcherite Tory (she can join the ranks!). I dare say that when staff in the senior common room of Birkbeck knew that Tessa was to be their Minister, they must have felt that Christmas was coming. However, she has not delivered the goods, and I believe that they would probably now agree with King Lear:
	"Ingratitude, thou marble-hearted fiend".
	I believe that we need an entirely different approach; fortunately, not the one advocated by the Chancellor of the Exchequer. The Government seem to intervene only when cheap headlines are to be won. I believe that Gordon Brown's infamous attack on my old college is the only speech that he has made about higher education in the course of the past three years. I understand that Tony Smith, the President of the College, invited him to dinner in order to explain what Magdalen and Oxford were doing to widen participation. The first lesson from that episode is that if you invite the Chancellor to dinner, remember that he bites the hand that feeds!
	Then the Chancellor said that Oxford was elite. Elite? Oxford elitism is nothing compared to the elitism of Harvard. Twenty-five per cent of the intake at Harvard every year is constituted of the families of old Harvard alumni. That is not the case in Oxford. It is a matter of old boys making sure that their sons and daughters go to Harvard. That is the elitism of which we are supposed to be guilty. Would the American Secretary, Larry Summers, attack Harvard, Yale, Princeton, MIT, Berkeley and Stamford as being elite? Would the socialist education Minister of France--a real socialist--attack Les Grandes Ecoles in Paris for being elite? It is an absurd position for the Chancellor to take. It was a capricious and malicious attack.
	Subsequently in an article in The Times, Mr Brown said that we must learn from the US. Perhaps for a moment we should examine students' packages in the US. There are grants, loans and work. When assessing need, Harvard takes into account not the student's income, but his parents' income, the value of the parents' house and the value of the parents' pensions. That is the kind of system that the Chancellor is encouraging us to consider. When it comes to work, I believe that Laura Spence will understand that she must engage in a major fund-raising exercise. She will have to work at Harvard. Many of the students there work in the kitchens, cooking food for the richer students. That is an opportunity that would have been denied to Laura Spence if she had gone to Edinburgh or Manchester Universities.
	Gordon Brown's aversion to Oxbridge has nothing to do with education; it has everything to do with politics. He obviously has difficulty with public school Oxford graduates, particularly if they live next door. When one considers the selection committees, not only at Oxford but at all the other universities, there is barely an old school tie among them today. The people who form the selection committees certainly cannot afford private education for their children because they are paid so poorly. Therefore, in fact the whole system is biased to pulling in more people from the state sector.
	Gordon Brown's rocket has exploded in his own hand. I believe that he likes to watch football on television, in which case he knows about elites. The proudest and greatest elite in our country today is Manchester United. It is ruthlessly selective. Only the best are selected; second and third-rate people are rejected. Are noble Lords aware that there is not one player in that team who comes from the private sector of education? Worse still, there is not one player in any premier league club who comes from the private education sector. Young boys are being denied the chance to play for their country by this discrimination. The Chancellor must call in the chairman of every football club and demand that they have a player from the private sector of education. That might even improve English soccer. One never knows; there is a long way to go.
	That analogy shows the absurdity of the Chancellor's position. He got his facts hopelessly mangled. Of the five students accepted at Magdalen, two came from state schools and three from ethnic minorities. Fifty-six per cent of the applications to Oxford come from state schools; 53 per cent are selected. Gordon Brown should focus upon the relative under-performance of state schools. Attacking elite universities before improving the performance of state schools is like attacking and taxing the motorist before public transport is improved.
	Of course, I accept that there is a real difference in the life opportunities between youngsters who attend private schools and those who attend schools in the inner city estates. However, the answer is not to punish Oxbridge and private schools but to reform the state system so that it competes with the best of the private schools. The Vice-Principal of Aberdeen University expressed the matter pithily last week:
	"If kids come out of school with poor qualifications, there is not a lot universities can do about it".
	We also need a programme of positive access. I praise the work undertaken by Peter Lampl of the Sutton Trust and many of the colleges and universities whose staff have written to me in the past few days, all demonstrating their attempt to increase the number of young people who apply to university. The critical point is the numbers that apply. Many schools do not apply. That is where the weakness lies.
	We should not overlook our success in higher education. In 1989, at the end of my time as Secretary of State, I set a target for participation in higher education, which, at that time, was running at 12 per cent. I said that by the end of the century we should get that figure up to 33 per cent--it is actually 35 per cent. Now the Government have set a further target of 50 per cent. I do not believe that that target can be reached unless there is a fundamental and radical change.
	I have come to the conclusion that no government of any complexion--whether Conservative, Labour or a coalition--will ever provide the funds that are properly required for higher education in our country. Our universities are, in fact, a nationalised industry. They have all the characteristics and weaknesses of a nationalised industry. It is an under-funded mass system with national salary negotiations instead of regional and local salary negotiations; top-down regulation of student numbers and of courses in each university; incessant bureaucratic, trivial intervention, day-by-day, which the universities resent; and under-investment in libraries, laboratories and computer rooms.
	Universities started as private institutions and they should become private institutions once again. They should become independent, free-standing bodies, totally in charge of their own affairs. That should be the object and I see one or two Members opposite who come from the university world nodding in agreement with me.
	If some Members opposite find the word "privatisation" a little too hard to take, they should note that their Government, this very day, is removing all the schools in the city of Leeds from the public sector and handing them over to the management of the private sector. We need something as radical as that in the university world.
	Universities should be responsible for the range of subjects that they provide; they should be demand led and not controlled by a quango; and they should be responsible for their own salary negotiations and their investment programmes. That is the American system which the Chancellor seems to admire. But how can we get there? It cannot be done overnight. Our system does not have the large American endowments which have been built up over decades and, in some cases, centuries.
	However, we are slowly moving to a market position. The market will run ahead of us in this area. Earlier this year the Committee of Vice-Chancellors and Principals--the Chairman of which is in her place opposite--held a conference on borderless education, that is, students gaining qualifications and degrees from leading universities like Yale and MIT over the Internet. That is the pure market operating. For Britain it provides opportunities and threats.
	The other area in which the market operates is in regard to overseas students. We have one of the highest levels of overseas students in the world: 71 per cent of the post-graduates at the London School of Economics, 50 per cent at Oxford, 40 per cent at Cambridge, 32 per cent at Nottingham and 26 per cent at Birmingham. Most of them pay full student fees.
	Do noble Lords remember the opposition faced by Margaret Thatcher in 1981 when she introduced full charging for overseas students? That is the lifeline of every university in our country today. In regard to the LSE, if one adds in the number of undergraduates, 63 per cent of students now come from overseas. One has only to visit the Aldwych at any lunch time to see every nation, every race, every creed represented there. It is a united nations. So fees from overseas students are one of the building blocks for the future.
	Another building block is per capita funding which I introduced in 1989. After per capita funding, which is the state contribution given for each student--so much if they study art, so much if they study science, so much for dentistry, so much for vets, so much for doctors, and so on--I envisaged that there would be loans, which I introduced, and then fees, but I did not have the boldness to introduce them in those days. Those are the various building blocks.
	Another building block is access funds, which I introduced. That money is given by the state to individual universities to create scholarships for students who need them. That now runs at £45 million a year, which I do not believe is enough.
	What more needs to be done? I believe that the Chancellor should make a gift to the universities of at least £1 billion as a capital endowment, dependent upon the size of the university. That is roughly the amount of money spent on the Dome. It could be taken out of the receipts from their mobile phone auctions, the results of the knowledge-based economy. They could take some of that money back and give it to the knowledge base. It should be a capital endowment to the universities that they could control themselves, with the interest being used for scholarships. That could be topped up by donations from companies and individuals. He should also extend the tax relief that he has given on the donation of shares to universities, which I recognise is attractive, and to personal donations--an extra tax bonus, as it were. That is Treasury income foregone, but it would act as a stimulus to create that necessary pool of endowment funding.
	In a few days, I believe that the Russell Committee will report. That is a committee of the 18 leading research universities in our country headed by Sir Colin Campbell of Nottingham. I hope that they will be radical in their proposals. My advice would be, because their futures are all at stake, to follow John Milton's words,
	"Strike high and venture dangerously".
	Unless they do that, I do not believe that the radical changes that are necessary will be introduced. I am certain that we are moving to a system where universities should be able to charge fees; where significant scholarships are available--the maximum at Harvard is 60 per cent--and where students can repay them, through the tax system, after they have left college. Scotland may well show the way.
	I believe that unless something along these lines is undertaken, the decline of our universities will continue. We must arrest that decline. We must start heading upwards. My Lords, I beg to move for Papers.

Lord Bernstein of Craigweil: My Lords, I must thank the noble Lord, Lord Baker of Dorking, for giving me the opportunity to make my maiden speech, although his accomplished speech has made me even more apprehensive than I would have been in any case on this occasion.
	As chairman of the Granada Group of companies for many years, I had thought that my experience of addressing shareholders at annual general meetings would have prepared me for anything, but I have to say that your Lordships, although fewer in number than our shareholders, are greater in gravitas, and, therefore, much more alarming.
	I also take this opportunity to thank your Lordships and the officers and staff for their kindness in making me so welcome here. It is a great pleasure to be following in the footsteps of my uncle, the late Lord Bernstein of Leigh, in your Lordships' House.
	Noble Lords who are due to speak today include those of great eminence in the university system. I am unable, in any way, to match their experience and learning, but I have spent many years in the world of visual arts, including being on the boards of a number of public galleries. Today I want to speak of the place of the colleges of art in the higher education system.
	When there are so many challenges facing our universities, this may seem to be raising a matter of less than central importance, but in many ways the arts define the kind of society in which we live. My noble friend Lady Blackstone, in a debate in this House last year, said that,
	"the arts provide their own justification by what they do for us all".
	Many people share that view.
	Last month the new Museum of Modern Art, Tate Modern, opened to great acclaim. On the Cup Final weekend in May, 78,000 people went to Wembley and over 80,000 to the Tate Modern.
	In our sophisticated world, the arts play an increasingly vital part, not least in economic terms. The turnover of the creative industries in this country is £60 billion a year and is growing at twice the rate of the economy as a whole. I was going to say that these industries need a firm foundation which has been provided by the colleges of art, but after the comments made on Sir Anthony Caro's role in the Millennium Bridge, I should rephrase that. However, in Sir Anthony's defence I should say that an eminent firm of consulting engineers was also employed in building the bridge.
	The colleges of art have been extremely successful and have been the envy of the world. In large part, that is due to Sir William Coldstream's report of the 1960s, which made two vital recommendations: first, that teachers should be artists and not academics; and, secondly, that successful and practising artists should teach students part-time. It is the one-to-one tuition by artists that has made the reputation of our art colleges. However, in recent years there have been a lot of changes. Many colleges are now part of the university system and others have adopted the university ethos. This provides students with many pluses, not least the opportunity of a broader education, but--and it is a big "but"--the process carries with it its own dangers.
	Colleges of art are becoming more and more influenced by universities in their entrance qualifications, methods of teaching and evaluation of work. For example, most art students now need to study a broad range of subjects for which credits are given towards their degree. One is bound to ask: does this detract from the concentration, even obsession, that is the mark of a successful artist? And one-to-one tuition, which is essential to the teaching of art, is under attack because it is more costly than the largely lecture-based teaching of academic subjects. Finally, the research assessment exercise, which is tuned to test academic research, is much less able to evaluate practical work.
	I believe that the disciplines and methods that are appropriate for academic work are less so for the work of art students. Most successful artists would never have flourished in a university environment. Although a collection of A-levels of the highest grade may be essential for the study of medicine, that certainly is not so for the study of art. Many artists are dyslexic; many come from the most unlikely backgrounds, with little academic success; and many would never dream of applying to study an academic discipline.
	One of Queen Victoria's daughters, Princess Louise, decided that she wanted to study at the art college which is now the Royal College of Art. The Queen wrote a letter to her, saying:
	"You must beware of artists my dear. They mix with all classes of society and are therefore dangerous".
	I am not sure that they are dangerous. But artists are different. That is my theme today. I am of course well aware of the importance of academic standards and methods, and of the attractions of a university education. I only suggest that art students do not always fit comfortably in that system. I suggest that we should not take for granted the success of our colleges of art.
	Thirty years after the Coldstream report, perhaps it is time to look again at the teaching of art in the higher education system to ensure that the colleges of art will be as successful in the future as they have been in the past.

Lord Jenkins of Hillhead: My Lords, it is a great pleasure for me to congratulate the noble Lord, Lord Bernstein of Craigwell. He comes from a family which has rendered great services to the arts and he has pre-eminently done that himself. I thought that he slightly underestimated his university qualifications. He was educated at one very distinguished university and has been associated with the administration of another two. I thought that he used that background to speak to us with a mixture of authority and charm. We congratulate him and look forward very much to hearing him in the future.
	This afternoon the noble Lord, Lord Baker, made a powerful speech, as he did in a debate on universities in December which I initiated. In that previous debate I endeavoured to transcend my role as Chancellor of Oxford--which I must of course declare--and to discuss the universities well beyond Oxford or even Oxbridge. Today my time is much less. We have also had the Chancellor of the Exchequer's little blitzkrieg on Oxford. I must therefore keep my sights narrower today.
	The Chancellor's attack resembled a blitzkrieg in being an act of sudden, unprovoked aggression. But it was incomparably less well-prepared and accurately carried out than the original blitzkrieg of 60 years ago this spring. The target was singularly ill chosen. It would be difficult to think of any group of academics to whom the designation "old school tie, old boy network" was less appropriate than the medical entrance examiners of Magdalen.
	The historical event which I think Mr Brown's enterprise more followed was the Cultural Revolution in China, which was designed not to achieve any practical result but just to stir things up for political purposes, to spread unease and to create damage, which took a lot of repairing. Mr Brown's diatribe was born of prejudice out of ignorance. Nearly every fact he adduced was false. I only hope that he is better briefed when dealing with Treasury matters. But I think that he must be, otherwise the economy would be in a worse state than it has been over the past three years. But as a former occupant of his office, I advise him to stick more to his last, and not to try to do too many other Ministers' jobs for them.
	Then we had the noble Baroness the Leader of the House in Washington. I of course gave her notice that I intended to refer to her this afternoon but she apparently has priorities other than this House. Her speech in Washington was not wise, although I do not think that it justified the vicious press attacks which have been made upon her, and which I do not endorse. I think it was unwise: first, because it is a mistake to mingle a commemorative occasion in America--I know those dinners well--with a controversial speech designed for political consumption at home; secondly, because her point about the best American universities was ill founded. She said about admissions policy, "You've done it at Harvard and Yale. We should do it at Oxford and Cambridge".
	I have a great admiration for those American universities and for some aspects of their admissions policy. But I will wager the noble Baroness any money she likes that the gap between the tiny percentage--a little over one per cent--of American children who are educated at the equivalent of our fully independent schools--I am not talking about parochial schools because they are not at all equivalent--and the percentage who still get in to Harvard and indeed Yale is substantially--very substantially--greater than the gap at Oxford or Cambridge.
	The noble Baroness has also been attacked about her own school. I will not join the argument about the status of Blackheath, but I know that I went to a still more ordinary grammar school, and that did not prevent my being elected on a very wide poll Chancellor of Oxford 13 years ago. That is wholly incompatible with the "old school tie" spectre at Oxford which so haunts Mr Brown.
	I also feel some sympathy with the noble Baroness about the schools of her children. My children followed almost exactly the same pattern. But one lesson, if I may say so, is not to throw stones out of glasshouses. She has recently been in danger of carrying that to an extreme order, equivalent to hurling boulders out of crystal palaces.
	The other lesson is not to treat education as primarily a matter of social engineering. At higher levels it is a matter of excellence, and of fair access to excellence certainly. At Oxford we recognise that we have some way further to go. Our ability to do that depends on a lot of good applicants being forthcoming from state schools. I very much doubt whether Mr Brown has helped in that direction.
	We want to cover this extra piece of ground, and we are making strenuous efforts to do so. But there are two contingent dangers. First, it would be quite wrong to say that a candidate, however good he or she may be, should be excluded because he or she comes from too privileged a school. Children mostly do not choose their own school, and in any event I doubt whether such an approach could stand up under the Human Rights Act. Secondly, there must be no question of governments, or agents of government, deciding which individuals should or should not be admitted to particular universities. There is already too much government interference, far more than in the much-praised Harvard and Yale.
	Finally, might the Government not consider whether in the recent flurry of ministerial pronouncements there is some contradiction between their elevating admissions to Oxford as a key battle ground and at the same time expressing the view that great efforts are to be made to keep those who do get in out of the most important public service jobs?

Baroness Young: My Lords, I should like to add my congratulations to the noble Lord, Lord Bernstein, on his most interesting and excellent maiden speech and say how much I appreciated his point about the value and importance of one-to-one teaching and tuition.
	I should like also to congratulate my noble friend Lord Baker of Dorking on introducing this debate. As he said, the issue of higher education was very important when he tabled his Motion. It is now at the top of the political agenda, following the extraordinary and intemperate attack on the University of Oxford by the Chancellor of the Exchequer in a speech full of inaccuracies, as the noble Lord, Lord Jenkins of Hillhead, pointed out. It is difficult not to believe that the Chancellor's remarks were designed to draw attention away from the Government's evident failures on other political matters, such as the National Health Service and education in schools. In any event, it was utterly disgraceful to use in this way a young girl--a sixth-former--who was about to start her A-level examinations. Not only did he succeed in offending the University of Oxford but, by implication, the University of Edinburgh, which has one of the oldest and most renowned medical schools--quite as good as the medical school at Nottingham.
	In the time allowed I can make only two points, but I should like to take up those issues raised by my noble friend Lord Baker. To a large extent, the prosperity of our country depends on having some universities that are of world class, not only for their academic excellence but also for the science-based industries linked to them, which are in the forefront of technological development and ring a number of university cities. The university world is a competitive one. Students who can do so go where they think the courses are best; some already choose Harvard or Yale, MIT or Stanford, to name but a few. Equally, dons will go where the facilities for their work are the best. In those circumstances, universities--this is particularly so in the case of Oxford--will not lower their standards of admission, and should not in any event be ashamed to aim to be elite. We surely do not want third-rate institutions of any kind.
	Universities will always look for the best students, whatever their background. Immense efforts are being made by Oxford. The university gave up its entrance examination because maintained schools said that they could not teach to it. The University of Oxford and, I suspect, others are willing to consider the American system of intelligence tests. Some such tests are being piloted. That leaves the interview, which is bound to be difficult when there are more applicants than places. As for the ratio of independent to maintained school pupils, it must be noted that one-third of independent school pupils achieve three A grades at A-level, which is a far higher proportion than those in maintained schools. That should say something about maintained schools and the need to raise the standards of education there.
	That leads to my second point. Everyone who cares about education wants to see equality of opportunity. There should not be any waste of the talents of our people. Indeed, in the 1960s a higher proportion of maintained school pupils went to Oxford, with an approximate split of 60 per cent to 40 per cent. But in the universities generally--I speak as a former Chancellor of the University of Greenwich--we are succeeding well in life-long learning. It is a pleasure that 50 per cent of students are women and that increasing numbers of ethnic minorities go to university. The latest OECD figures show that the United Kingdom has now overtaken the United States in the number of young people who get degrees.
	All that said, it is essential that maintained school pupils should apply for places at Oxford and Cambridge. Great efforts are made to encourage them to do so. Pupils are invited to the universities to see what they are like. Students visit schools to say what their experience is. But, I regret to say--I believe it to be true--that there are still some teachers who actually discourage their pupils from applying, saying that Oxbridge and other universities are "not for them". Frequently, colleges approach schools and schools do not respond. The first lesson to come out of this is that one cannot deal with people who do not apply. In my view, schools should work to raise standards and expectations. They should train their pupils for interviews; for every job will require an interview, whether it is a tough one for a university place or for a 16 year-old who leaves school at the earliest possible opportunity to go to work, say, in a local supermarket.
	To conclude, I agree very much with my noble friend Lord Baker that Oxbridge and a number of universities--perhaps all--should now seriously consider becoming independent. There is already a real danger of universities not being able to recruit. We have heard from my noble friend that it is very difficult to recruit economists, lawyers and those in computing. It is very difficult indeed to staff the new business schools. When we consider that a professor earns around £40,000 a year--less than the starting pay of a solicitor and, dare I say, very considerably less than that of a Member of Parliament or (as we have heard) a special adviser--is it likely that we shall succeed in recruiting those who are most in demand in society?
	What is really needed is a good deal more money to keep up the standards of excellence. As we have discovered over so many other issues in our economic and political life, if we are to keep up the standards of excellence but the state cannot or will not provide enough money the only alternative is to privatise. We need to face up to that as a country, not only for the financial independence of the universities but the maintenance of their excellence and, essentially, their academic independence.

Baroness Walmsley: My Lords, I am most grateful to the noble Lord, Lord Baker of Dorking, for giving me this opportunity to speak for the first time in your Lordships' House on a matter which is close to my heart--equal access to higher education for all students.
	Since I was first introduced to this House three weeks ago, I have been treated with the utmost kindness and friendliness by noble Lords and Baronesses from all Benches, for which I am most grateful. I am not renowned for my sense of direction and therefore have more cause than most to be grateful to the wonderful staff, who have guided me through the geography and procedures of this historic place with unfailing patience, good humour and courtesy.
	The subject of this debate is the state of higher education. The quality of any product is, to a great extent, affected by the quality of the raw material. Therefore, it is hardly surprising that our leading universities compete avidly with each other for the best raw material--the students applying for admission. It is to this process that I intend to address my remarks.
	We have heard much about what the universities are doing to level the playing field between state and independent pupils of similar ability. However, I should like to take one step back and look at what schools are doing. During my years as a biology teacher I helped many young people through the process of applying for admission to university. It was a very difficult time for them. Although I do not recall ever having a pupil bring me an apple, I will always remember one particular sixth-former who once brought me, by way of thanks, a rabbit which he had shot that morning on his father's farm.
	I vividly remember the interview for my own place in the botany department at Liverpool University. It was a terrifying experience. The interviewer peered at me through his spectacles and said, "Miss Watson, we are going to stretch you in all directions". I have felt somewhat the same since entering your Lordships' House, although the stretching may have as much to do with the delicious offerings of the Refreshment Department as the intellectual stimulation of the debates.
	There has been much discussion on why it is that so many well-qualified young people from state schools either do not apply to our top universities or fall at the hurdle of the interview. Despite the evidence that they have the intellectual ability to benefit from a place at these institutions, many of them are not admitted, in the view of some interviewers, because they do not project themselves as well as students from independent schools. Why is that, when they possess equally fine exam results in many cases?I believe that the answer is that, although schools teach the three Rs, some of them do not pay sufficient attention to the two Cs--confidence and communication.
	Those of your Lordships who have recently been in contact with young people of 17 and 18 may not have perceived them to be lacking in confidence or the ability to communicate. However, this may have been in an informal situation. The whole of society has become less formal in recent years; even classrooms are not the formal environment I remember from my own school days. The consequence is that if a young person who has not been used to coping with such pressure is put into the formal and stressful environment of an interview, the picture is often very different. They become unable to project to a set of strangers the qualities which they undoubtedly possess.
	The leading universities have their pick of a plentiful supply of young people with three As at A-level. They separate them one from another at the interview, by judging their personal qualities. Young people are not supermarket trolleys, stuffed with packets of GCSEs and cartons of A-levels. Like every supermarket trolley I have ever encountered, they have personalities and minds of their own, and the leading universities know this only too well.
	We are failing many able young people from state schools if we are not helping them to develop the self-confidence and communication skills which they need to show the interviewers who they really are in the short time available. It is the person the universities are looking for, not just a stack of exam certificates.
	How, then, can we improve this situation?
	First of all, we can give young people from state schools confidence in the system by urging the elite universities to publicise with all their energy their commitment to recruiting the most able students from all backgrounds.
	Secondly, I believe that schools can do more to develop students' confidence in themselves. Where, for example, are the debating societies, which used to thrive among sixth forms? I believe they exist more in the independent sector than in state schools. The English Speaking Union's School Mace debating competition, chaired by my noble friend Lord Watson of Richmond, attracts fewer than 10 per cent of all secondary schools. Although three-quarters of the schools entering are now from the state sector, the percentage of individual pupils entering from the independent sector is still disproportionately high. This excellent competition gives opportunities for the stars of the school debating societies to shine in a national arena, but they are not likely to enter such a prestigious external forum if they are not accustomed to debating in schools.
	I hope that your Lordships will agree with me that debating is not only great fun, but is very good for young people. It helps them to marshal their arguments and express them coherently. It encourages them to think about how best to communicate their ideas; and, after the initial terror of standing up in front of their peers and making a speech, it gives them confidence. They find, as I am doing today, that it is not so bad after all. After a while, they even come to enjoy it.
	Therefore, I welcome the similar views expressed recently by the Secretary of State for Education and Employment, and encourage more state schools to find time in their busy schedules to run debating societies. Perhaps then in future fewer able three As students will fall at the last fence of the interview for lack of the two Cs. Then we may have to make room on the Benches of this place for more able young debaters and look to our laurels.

Lord Bragg: My Lords, it gives me very great pleasure to congratulate the noble Baroness, Lady Walmsley, on that graceful and confident maiden speech. Her wide experience in the Liberal Party at all levels and her special skills honed as a public relations consultant stood her, and I am sure will stand your Lordships' House, in good stead. I agree completely with what the noble Baroness said about debating societies. I also congratulate my noble friend Lord Bernstein of Craigwell on his maiden speech.
	A mere six days ago I had the honour to be installed as Chancellor of Leeds University, so I am well aware that my knowledge of the subject of this debate, when compared with the accumulated experience and wisdom of so many of your Lordships, is, as yet, slight. But I hope that first, inevitably broad, views may also have their place, and it is in that spirit that I offer two impressions and a conclusion to the debate so timely called by the noble Lord, Lord Baker.
	First, I am astounded by the success of our universities, as exemplified by Leeds. In the national malaise of carping and among the commonwealth of monotonously complaining commentators, the young people of Britain are paraded as yobs or slobs, drugged or drones, and always miles behind everybody else. In Leeds, and I am sure elsewhere, there is among them optimism, determination, flair and delight in intelligence. Yes, there are financial and structural difficulties which need attention, but the positive side, which struck me first of all, is palpable.
	To a newcomer like myself it was like being taken down to the engine rooms by Rudyard Kipling in McAndrew's Hymn. Universities today are the engines which drive the state. Our universities have relatively recently taken on the several and strenuous trials involved in the Herculean task--cliches often speak true--of transforming our society. Universities have been asked to conduct a monumental expansion and to maintain, even improve, standards, to raise their sights in research, to take on global competition, to feed industry with ideas, and to steer steady on the fundamental integrity of scholarship. It is a bold and noble enterprise, and Leeds is doing this. So, I am sure, are others. It is a wonderful success story and should occasionally be sung as such.
	My second impression in no way contradicts the first, but it flows from it. All this energy of growth has been provided by men and women whose dedication has been undervalued and under-rewarded. Many of your Lordships know that better than I, so I shall take one example only. The pay of lecturers is 30 per cent down--30 per cent at least-- when set against that of comparable professions. That is both unjust and dangerous. So far, I am told, the universities are holding the line--but just.
	In some departments--ironically, often those most central to our future growth as a new technology nation--recruitment is already extremely difficult. In all departments, serious and level-headed members of staff--across the disciplines--express deep concern that if remedy is not found soon a system stretched to exemplary efficiency will simply begin to snap. Supply, though in many ways admirable, is struggling to keep up with justified demand.
	Any new "efficiency gain"--that is, a cut in core funding--will surely cause the final trumpets to begin to sound outside some of the walls of academia. Even a 1 per cent "efficiency gain" at Leeds is £2.5 million, and as 60 per cent of the budget goes on staff this would be the loss of a lot of jobs. Core funding is just that, and to neglect or, worse, diminish it is a risk not worth taking.
	The universities have done us proud, but success needs to be nurtured, and present success, I am told, conceals, without doubt, imminent crisis--the word is widely used--unless real help is forthcoming.
	These are my two first impressions. The conclusion is simple. We live in a world which will be governed in every possible sense by intellectual properties. In this country we have a magnificent resource. It is the mind, in all its ramifications, which will control the future, and if we wish to play a full and prosperous part we must--as I am sure the present Government will--cultivate that cerebral garden with all the forces we can summon up.

Baroness Perry of Southwark: My Lords, I am grateful to my noble friend Lord Baker of Dorking for giving us the opportunity to debate higher education, as it has been one of the worst areas of government failure in the past three years. The country enjoyed seven years of unparalleled expansion of higher education during the John Major government, when the numbers of young people going forward into higher education doubled, with a consequent huge rise in those staying on in school past the age of 16, and the proportion of school-leavers going forward into higher education almost tripled. Under the present Government, we now have a decline in applications, most sharply among mature students.
	The Government's fine words about increasing access are the exact opposite of reality. The removal of the maintenance grant and the introduction of fees has meant that access to higher education is now infinitely more difficult for the poorest students as well as for older students who already have heavy financial commitments. The maintenance grant was means tested and therefore only the poorer students were eligible, and it is they who have been most disadvantaged by this Government's actions.
	Meanwhile, the much publicised 11 per cent additional funding, which no doubt the Minister will rehearse to us when she speaks, has not helped the core funding of universities, which have actually suffered an annual drop in funding year on year under the present Government. Temporary boosts in hardship funds for students or in capital building programmes--which is where the increases are calculated--while not unwelcome, do nothing to help universities to continue to provide high quality education for their students. But in the long term, even more damaging is this Government's attempt to bring all universities on to a uniform single funding level, presumably from some idealistic belief that uniformity is an inherently good idea.
	In the brief time available to me I wish to make an impassioned defence of diversity. We have today a diverse student body representing a wide range of social and educational backgrounds, as well as a wide range of ability and motivation. It also encompasses a wide age range, demonstrating the flexible system of lifelong learning which must be the higher education system of any civilised country. I can only hope that our country's system will continue to make provision which allows people to enter higher education, on a full-time basis if that is right for them, at any age which their life chances and personal motivation dictate. But the attack on opportunities for mature students puts that aspiration gravely at risk.
	Equally obviously, the demands of the complex, diverse and rapidly changing economy argue for a very diverse higher education system, not one in which uniformity produces a population of graduates formed from the same mould. A modern economy needs the wide range of vocational courses which the new universities provide so well. Their four-year vocational degrees, developed to a high standard of both vocational relevance and academic understanding, have been a feature of our higher education system of which we should be proud. It is my hope that their reputation and standing, and the justifiable pride of their graduates in their hard-won degrees, will not be damaged by the Government's extraordinary proposal for a two-year vocational degree (an idea which I hope will be quickly buried).
	We should be proud of our world-class vocational higher education. The previous government's granting of university title to the former polytechnics was a sign of their commitment to parity of esteem between vocational and academic education, and attracted interest and approval around the world. Many of the new universities have developed world-class vocational degrees, often in close collaboration with local employers, as well as professionally and industrially relevant applied research. As a country we should be proud of this element in our higher education system, allied as it is to open access, appealing often to mature students with strong vocational commitment.
	Our higher education system must also continue to support the academically elite institutions which provide for the brightest of young people, many of whom will be studying for non-vocational degrees, taught by world-class academics whose own research is such a rich source of wealth creation for this nation. World-class research universities are an essential ingredient of a successful economy, as other speakers have said. If we lose our international edge in pure research, we lose our international edge in the global economy.
	Diversity of provision would be deplorable if either the new universities or the older traditional universities were unsuccessful in the mission they pursue, or if they were by their nature closed to students qualified to seek access to the kind of provision they make. That, however, is not the case. Universities such as the LSE, Imperial, Warwick, Bath, York, Oxford and Cambridge, not only compete successfully in the global market of world-class research activity, but have also triumphed in their close relationships with industry and their ability to attract industrial investment for their research. More than half their students come from an ordinary comprehensive school, and if the comprehensive schools improve their examination performance, that proportion will increase--unless, of course, the high-achieving students from comprehensive schools are deterred from applying by ill-chosen advice from their teachers, or even more ill-chosen comments by leading politicians.
	We should be working towards a system which embraces and celebrates the diversity of our higher education institutions, not one which brings them all into a single model, ill fitted both for the needs of students and the needs of society. The absurdities of league tables, which apply the same input and output measurements to all universities, are only some of the factors which mitigate against diversity. Ranking universities by the A-level points of their entrants only punishes those with open access. When the league tables of pure research assessment are published, they condemn as failures those universities which serve their local communities by applied, collaborative research. If league tables of state school entrants are to be published, we shall punish those universities which apply only the higher standards of A-level performance to their entrants.
	Such a system is indefensible. Before we go any further down the road which destroys the best of all that has been built up in recent decades, we must stop and rethink the system of funding, measuring and evaluating our universities and the students within them.

Lord Haskel: My Lords, I too congratulate the noble Lord, Lord Baker, on moving this Motion. I was quite touched by his faith in the markets to solve our higher education problems. Markets allocate resources; they do not solve problems. People solve problems.
	I do not want to enter into the argument about access. I want to speak about outcome: the flow of people from higher education into the world of work and employment. In the old days that transition was easy. People going into higher education came from families and backgrounds that enabled them to form a fairly clear idea of what they were going to do after university, and they expected to do it for the rest of their lives.
	With the expansion of higher education, students come from all kinds of conventional and unconventional backgrounds. They can be the first generation to go into higher education; they may be the first generation with English as a first language, and they expect many changes in the work that they do and the organisations for which they work. They know that their skills and knowledge will be obsolete in a few years' time and yet those will be their most valuable assets.
	Employers' needs are also changing. They look for talented people everywhere, not only in Oxbridge. So, welcome to the knowledge economy referred to by the noble Lord, Lord Baker; welcome to an economic landscape that seems to be in continuous turmoil, where new areas of economic potential constantly arise, and endless competition means that we have to be continuously resourceful, and the new economy is changing all the rules.
	Fortunately, there is a bridge between the world of higher education and that of work. It is a bridge that prepares graduates to manage their own personal development, to adapt to the change and to make effective transitions. That bridge is the Higher Education Graduate Careers Service. No longer can a modern careers service in higher education be about giving final-year students a one-hour careers guidance interview shortly before they leave. The careers service too has to move into the knowledge economy.
	Last Friday my noble friend the Minister announced a review of the current state of higher education careers services and how standards could be raised. I welcome that. I believe that the providers and users of the service welcome it. I know that Mr Martin Thorne, president of the Association of Graduate Careers Advisory Services, also welcomes the review. We all welcome it because it emphasises how important the service is.
	Careers people are serious and dedicated men and women, and as good practitioners they welcome outside reviews from time to time. It helps to take stock of progress, institute changes and prepare for the future. Yet the service has made changes in recent years both in what it does and in how it does it. I hope that the review will assess those changes. The careers guidance profession, like all good professions, seeks to raise its standards. It is doing that in conjunction with the Quality Assurance Agency for Higher Education.
	Careers advisers also help graduates to develop the so-called "soft skills" of networking, openness to change and adaptability; in other words, to take control of their own careers. They also seek to promote self-employment and professional development. They provide opportunities for graduates to work in small and medium-sized companies--companies which, in the past, would never have considered employing a graduate. The service now also tries to make provision for students with special guidance needs; for example, the disabled, ethnic minorities, older graduates, international students and even the artists referred to by my noble friend Lord Bernstein in his excellent maiden speech. Of course, these changes will not be equally implemented throughout the country, but when the review team comes across a lack of progress I hope that it will not just put it down to the poor professionalism of the local service. I hope that the team will probe more deeply. There could be other causes, such as lack of support of other managers in the institution, lack of support from the higher education funding bodies or lack of support from policy-makers. Vice-chancellors and principals in particular can be very influential in the successful participation of the careers service within their institutions.
	We now have almost one-third of our young people going into higher education, and our target is to increase that percentage to a half. This will still leave us behind many of our competitors, but the lack of numbers can be made up by a good careers advisory service that works strategically to encourage graduates not only into blue chip businesses and organisations, but also into new businesses; that is to say, businesses and organisations that have never previously taken graduates.

Lord Dearing: My Lords, perhaps I may join in the congratulations expressed to the two maiden speakers on their demonstration of relevant knowledge and performance in the two CCs, which is enviable. I declare an interest as the chancellor of the University of Nottingham, not a party to the Russell group's liberations nevertheless. I shall deal with three issues--access, quality and research.
	First, access is a major issue. I do not have in mind the universities of Oxford and Cambridge here. I am very conscious of the inverse correlation between social class and access to universities and, therefore, to the kind of "ticket to ride for life": if you are born into social class 1, it is three to one on that you will go into higher education; if social class 5, the reciprocal of that. We must deal with that situation.
	The Government are taking relevant measures. I agree with the noble Baroness, Lady Perry, about maintenance grants; but that is the past. The Government are doing many things that I welcome. I heard the Minister for lifelong learning say that there are more measures to be expected from the Government this autumn in the spending announcements. That is good. However, the battle for better access is not to be fought when youngsters are 17 or 18. It must be fought in our primary schools. It is a national scandal that we have 7 million adults who, we are told, cannot find a plumber in the Yellow Pages, such is their lack of skills in their national language and in basic arithmetic. That is where the battle must be fought. That is our prime national cause. David Blunkett is right to put his job on the line to achieve the levels of performance that will give people an enfranchisement for life--access.
	Secondly, I turn to quality. The noble Lord, Lord Baker, is absolutely right. We have a prime national asset and it has done great things in achieving that welcome twofold or threefold increase in participation--that also applies to mature students. But quality cannot be taken for granted. Although no promises have been given by the Minister, I notice that she does not rule out the possibility that salaries will be one of the issues to be addressed during the coming spending review. You cannot exploit--I hope that I may use that word--people indefinitely and expect our universities to continue to be world class. They will not. Salaries must be addressed, whether it is for young researchers or the "profs", which my committee found to be two areas of particular concern. There is also a problem concerning manual workers in the universities.
	My third issue--I am seeking to be very brief--is research. I speak for the university interest, but I speak foremost for the national interest. We have only one future if we are to succeed economically; namely, in knowledge-based, research-based industry and commerce. It is the only viable strategy for a nation like ours. My committee found that our universities ranked second in research only to the United States. They are research efficient, as no other nation. That is very good. However, in terms of how "second" we are, there is an enormous gap with the US. Funding per capita for research in the United States, whether in industry or in higher education, is twice that of the United Kingdom. We do not compare awfully well with some other members of the European Community. Sweden is a particular example. It has rightly adopted the policy of an economy based upon high technology and research.
	When my committee was carrying out its work, we found a genuine crisis about the research capability of the universities. Again, we have been exploiting the past and our people. Through not renewing infrastructure, we were getting a worn-down, worn-out research capability; and there was a crisis that needed to be dealt with. There were responses to the situation. Two charitable foundations went into action with the Government and a scheme was introduced for renewing infrastructure.
	However, I remain concerned that there is risk that the research councils will not be providing the funding for indirect costs that are an essential part of funding research. If I remember rightly, my committee recommended that the proportion to be allocated for overheads by the research councils should be increased from 45 per cent to 60 per cent. I have not heard that this has happened. Indeed, I doubt whether we went far enough. I remember that we concluded that it should be increased to 60 per cent-- compared with a maximum of 65 per cent recommended by the Cooper Brothers--but that it should be increased by up to 100 per cent, if that were necessary in particular cases. We must not cheat ourselves and the universities by pretending that we are increasing the volume of research unless we are funding the indirect cost. We must not run down the infrastructure again.
	I am also concerned about volume. If we are to pursue a policy of knowledge-based, research-based industry and commerce, we must be world class. I do not mean in every university and certainly not in every subject in every university. But we must invest more in our research output. I have seen the CVCP document which, if I remember rightly, asks for an extra £1.35 billion over four years. I do not believe that it asks for enough--and I was not put up to say that either! There is such an immense national interest here that should be advanced, as well as safeguarded.
	In this research expenditure, I am also concerned that we should build bridges between the universities and industry and commerce. It is no good doing research in the ivory tower only; there must be spin off. Therefore, I wish to encourage the Government in a scheme that they introduced to promote partnership in research with industry. I welcome the initiative of the noble Lord, Lord Baker, in introducing this debate. We have much to do.

Baroness James of Holland Park: My Lords, I, too, am grateful to my noble friend Lord Baker of Dorking for initiating this important debate, although I feel that I may be ill qualified to take part. I have had no higher education and left school at the age of 16. In this, I am sure that I am not alone in your Lordships' House. However, I had the great advantage of being educated at one of the old local authority high schools--an education that was liberal, humane, disciplined, intellectually stimulating and which was concerned with good manners and civilised conduct, as well as with learning. I know myself to have been fortunate.
	Inevitably, of course, there are references in this debate to what has become known as the Laura Spence affair. Indeed, it was a scandal, although hardly in the sense that the Chancellor of the Exchequer intended. We have to assume that rational men intend the natural results of their actions. This means that the Chancellor, to propitiate those members of his party who require regular skirmishes of the class war to satisfy their passion for social indignation, and perhaps in pursuit of some private ambition, deliberately insulted one of the world's greatest universities, slandered a distinguished academic and, perhaps most serious of all, put back, perhaps for years, the patient work of Oxford in persuading young people from the state system that Oxford welcomes them and that they can be happy there.
	What I find particularly depressing about this affair is the clear message it sends of government animus towards Oxford. It is useless for Ministers to declare that this is not so; their deeds speak louder than words. I find this animus curious. When I am in Oxford common rooms I never feel that I am in a bastion of conservatism.

Noble Lords: Oh!

Baroness James of Holland Park: Of course all universities are under financial pressure with workloads increasing, the burden of an onerous bureaucracy, inadequate resources and, frankly, disgraceful salaries.
	The tutorial system at Oxford and Cambridge is particularly expensive but is regarded as fundamental to the high quality of teaching students receive. The system of state support for Oxford and Cambridge is complicated but at Oxford the Government have decided to reduce their support by £6.5 million over the 10 years to the year 2009--that is £650,000 a year in the values of 1999.
	If the state is no longer able to support university education of this standard, or to allow Oxford and Cambridge to charge top-up fees, then perhaps we should indeed face what previously seemed unthinkable: that major universities should have the right to become independent, charging such fees as are necessary to maintain their standards and providing for the poorer students by a liberal system of bursaries and grants, as happens at Harvard.
	Oxford and Cambridge are not, of course, the only centres of academic excellence. Those universities in the top rank are well known to prospective students, to employers and to the community at large. Instead of seeking to diminish the quality of the best, should we not take a more critical look at the other end of the spectrum? From the published tables the divergence in results is depressing. At the bottom of the table in one university 31 per cent of students left without a degree. We can imagine the cost of this financially, in the waste of time and resources, and in the effect on the students' morale and prospects. We have a two-tier, perhaps a three-tier, system of higher education. I suspect that this is as socially divisive as it is educationally unsatisfactory.
	If the policy of the Government is that every young person who wants to go to university should be able to do so, perhaps we should face up to the implications of this policy. It makes even more vitally important what is surely our educational priority--the improvement of state secondary education. Even so there will always be some for whom university is not possible. How disadvantaged will they feel when university entrance is regarded as a right irrespective of intellectual achievement or effort? When that happy day comes, we shall no doubt do away with the system of classifying degrees. If everyone cannot achieve a First, then no one should achieve a First. If some students find examinations difficult, let us do away with examinations. We cannot build excellence on a world in which no one is ever allowed to fail.
	We live in a populist, media-driven, envious and destructive world in which we seem to take more delight in destroying than in preserving. But if our higher education is to continue to attract international respect, with all the financial and other advantages which follow, let us recognise value and support excellence wherever it is found in individuals and in institutions. In our enthusiasm for everything new, let us not forget that much that is best in our society has been patiently built up over centuries. It can easily be destroyed by neglect, ill will or deliberate policy. Once lost, it can never be regained.

The Lord Bishop of Portsmouth: My Lords, like many others I am grateful to the noble Lord, Lord Baker, for introducing this debate, coming as it does six months after the debate initiated by the noble Lord, Lord Jenkins.
	As a young student in my home city of Edinburgh during the 1960s I witnessed at first hand the rapid expansion of higher education following the Robbins report. I returned to higher education in the 1980s as chaplain and lecturer at the University of Manchester and spent much time picking up the human cost of the stringent cuts that had been introduced seemingly at random and, without doubt, too rapidly.
	The University of Portsmouth, about which I want to speak briefly, has been at the forefront of widening access to higher education. Here I refer with appreciation to the maiden speech of the noble Baroness, Lady Walmsley. I am a governor of the University of Portsmouth. Its history is simple. It was founded as a technical college in 1894 and received its university charter in 1992. It has made a significant contribution to the economic, cultural and educational development of the south coast around the M27 corridor.
	With close links to local and regional employers, particularly in defence and technology, the university, like other former polytechnics, has made the transition to its new status and is now a thriving community with 13,000 full-time and 5,000 part-time students and 2,000 teaching and administrative staff. It has focused on vocational and professional programmes, selectively promoting research of national and international quality. What I believe to be of more importance is that it serves an area which bucks many of the trends normally associated with the South East. Portsmouth as a city has a history of under-achievement of a severe kind and low expectations in education. The university is committed to an agenda of widening participation and seeks to do so in collaboration with further education partners and the local education authority.
	I see in the University of Portsmouth a clear desire to put into practice the principles of "lifelong learning". There has been some recent expansion in pharmacy; the development of engineering in collaboration with the Royal Navy; and, as I have just gathered from the vice-chancellor, the provision of training on fraud prevention for the Benefits Agency. Perhaps toll bridges will be introduced across the river, the creek, to Portsea Island!
	There is also a keen desire to participate in the newly established regional development agency to provide services for new and small businesses and to promote enterprise hubs. In addition, because Portsmouth is one of the gateways to continental Europe there is now a significant number of students, as well as commercial and educational links, both within and beyond the European Union.
	I wish to make two brief observations which I hope will be of value to the debate. First, I draw attention to the human impact on university teachers and students of rapid change both in culture and in budgetary constraints--an impact detrimental to morale and to the character and relationships of the academic community. I say this with no sense of nostalgia because that ethos lives on; it does not remain static. But it is under severe pressure, and some would say that in some places it is almost non-existent.
	In part budgetary constraints are a healthy development. In whatever sphere we operate--I am sorry to speak rather badly; I have toothache--we must be held accountable for the right and proper use of our resources, which we might term "good stewardship". However, I simply do not believe that our university lecturers, administrative staff and students are intent on frittering away public money. While there will inevitably be more efficient ways of doing things, and occasionally projects whose value we question, there remains a basic principle about adequate funding for the role that we ask our universities to undertake. At root, this is part of a larger question about the way in which we as a society value those whose life's work cannot be counted on an abacus but has to be experienced in lives given fresh direction and new opportunities through access to education. This seems to me to be a profoundly valuable contribution to the whole human experience, as well as one which pays dividends in the cultural and economic life of the United Kingdom and beyond.
	Secondly, there is the question of stability and change. I concur strongly with the words of Vice Admiral Jonathon Band, former assistant chief of naval staff and now head of the defence training review, who wrote in the current Royal Navy journal Broadsheet,
	"I cannot remember a time when I, and all around me, have not been saying 'what we need is a period of stability'. Yet it never seems to happen. Indeed, today many commentators are suggesting that in the twenty-first century the only constant will be constant change".
	To translate this into the current debate, I believe the much-valued words of St Augustine at the beginning of his confessions are apposite:
	"My heart is restless till I find my rest in thee".
	In an age of increasing speed of communication, stability and stillness will not be found exclusively in the mode of delivery of educational opportunities. These must of necessity be constantly reinvented or realigned to meet current needs. However, there is an underlying ethos and character, often intangible but none the less real, to our educational institutions which should provide a valuable level of continuity with previous generations of students and with the students of generations to come. Those values are about acknowledging the individual within a large institution, respecting the diversity of views and beliefs inherent in a university and developing a deeply-rooted search for truth which lies at the heart of the human condition.

Lord Dahrendorf: My Lords, as I pondered what contribution I might make to this important and, as we now know, thoughtful and informative debate which the noble Lord, Lord Baker of Dorking, has introduced, I discovered to my horror that I have now been involved in either running or reforming institutions of higher education for no fewer than 40 years, starting as a campaigner for education as a civil right in Germany, continuing as a European commissioner for a while responsible for research and education, going on to be Director of the London School of Economics, after that Head of House in Oxford and Pro-Vice-Chancellor of the University of Oxford and, more recently, becoming deeply involved in reform of higher education in the post-communist countries of east central Europe.
	The conclusion that I have drawn from my experiences as far as concerns higher education is that for a higher education system to be first rate it has to do three things. It has to be accessible to all who are able and willing. It has to be sufficiently diversified to cater for a variety of needs, from the cutting edge of research to applied training, from general education to lifelong learning. It has to have open borders to the world around, to business and the professions as well as to local communities and wider society. Britain's higher education system achieves those needs to a remarkable degree, certainly better than that of any other European country. It is no accident that some of our top universities could probably fill every place with an able European applicant who is trying to escape the shambles of universities on the Continent.
	In view of these facts, I have long been bewildered about the attitude of governments to higher education and notably to universities. The last Prime Minister, in my experience, who appreciated universities was the noble Lord, Lord Callaghan, who was not a graduate himself. His successor kept on haranguing us for having betrayed the country by neglecting the needs of business in favour of the "cosier" professions. Her successor prided himself on having been to the "university of life". Ministerial colleagues of his successor now carry on about universities neglecting the under-privileged. First, we were insufficiently capitalist, now we are insufficiently socialist. It is almost as if governments are ashamed of the great national treasure of Britain--its universities.
	I cannot help adding that there is quite a lot about which to be ashamed in this country--child poverty, the growing illiteracy of considerable numbers--but not universities. In my view, the real problem of Britain is not remnants of privilege but the absence of a decent, basic standard of life for all. It is not Oxford, but Lambeth, Gateshead and Easterhouse.
	Talking about Oxford--which in my case is an acquired taste since I am an LSE person, not quite born but certainly bred--I find it remarkable what efforts Oxford has made to widen access, ex gratia, as it were, for it was hardly given government support. I also find it remarkable how Oxford has, along with other top universities, certainly along with Cambridge, upheld its standards of excellence despite massive financial and other pressures. If Oxford has a problem, it is, in my view, not access but opportunities for research and advanced study. In the sciences great progress has been made, but in the humanities and social sciences much more needs to be done, certainly if Oxford wants to continue to compete with Harvard, Columbia, Stanford and others.
	When this Government took office I had hopes that we would see an end of the onslaught on places of excellence that has characterised the past quarter of a century in Britain. Even one ministerial speech delivered with the enthusiasm with which Ministers have greeted the Millenium Dome would have been quite helpful. If that is too much to ask, silence would have been acceptable as a second best.
	I admire the resilience of Britain's institutions of higher learning, but I suspect that it cannot last for ever. Already there are signs of strain caused by resource starvation, assessment mania, bureaucratisation and public attacks. I say to the Government that, in my experience, Britain's universities are well aware of the needs of the day, but every now and again they could do with a little encouragement, and they deserve it.

Lord Trefgarne: My Lords, I only wish to make the shortest of interventions in this debate. I must start by thanking my noble friend, Lord Baker, for introducing the debate in such an articulate and effective way. I must also declare an interest as the paid chairman of the Engineering and Marine Training Authority, the national training organisation for engineering manufacture.
	Several of your Lordships have already referred to the rather unwise attack on some of our higher education institutions, particularly Oxford, by the Chancellor of the Exchequer and other members of the Government. Not only was it unwise, but it was also, I believe, misguided. It is simply the fact that the competition for places in some universities nowadays, especially Oxford and Cambridge, is tougher than ever. Straight A grades at A-level no longer guarantee a place and many institutions, when filling courses, must now look at other ways of judging suitable candidates.
	It is not the universities that are at fault for setting high standards but the shortcomings of our secondary education system which continues to fail some of our young people.
	I hope that I may be permitted to add, in parentheses, that the abolition of the assisted places scheme has not helped in this regard. Under that scheme so-called public schools were able to accept students who could not otherwise pay the fees and, perhaps, prepare them more effectively for Oxford or Cambridge entry.
	I am particularly concerned that the debate sparked by the Chancellor will have damaging consequences for industry. One of the principal roles of my organisation--EMTA--is to encourage the brightest and best of our young people to pursue engineering as a career. Throughout the year we visit schools and attend exhibitions with a view to attracting young people into the industry. That is not an easy task and it will, I fear, be made more difficult. We do not seek to persuade young people to take one educational route or another, whether it be via vocational qualifications or higher education. But we work very hard to encourage enough young people, at the age of 16 who may feel so inclined, to consider pursuing a vocational rather than an academic route.
	For many young people, that is a difficult decision to take. They face competing pressures from their parents, teachers and friends to remain at school with the intention of going on to university. For some such youngsters, the route may be totally appropriate but for others, taking a vocational route would be a much better option.
	The plain fact is that a university degree is not necessarily the right course for every young person. I fear that one of the consequences--and a very serious consequence--following the Chancellor's remarks is that young people will believe that anything less than a university degree is failure. I am concerned that we shall face an ever more difficult job in persuading young people to consider the vocational route.
	If the Government's desire is to increase the percentage of young people going into higher education, then that will reduce the number of young people which industry can attract into the vocational route. Industry will not have the apprentices it needs and we shall have an even greater skills shortage.
	For an industry such as engineering, we need people with early experience of the workplace and many businesses question whether a university education provides that. In truth, the shortage of degree-qualified engineers is much less marked than the shortage of vocationally-skilled persons.
	I hope that one of the consequences of this whole debate is that future emphasis on higher education will be job-related degrees, such as the Government's proposed foundation degrees. I am sorry that I disagree with my noble friend Lady Perry in that regard. At the moment, we have only limited information on that proposal but it sounds to me to be imaginative and, at this stage, I very much support it. I look forward to hearing further details from the noble Baroness, perhaps this evening.
	This is a useful debate. My intervention has been short but deliberately so. I look forward to hearing the Minister's reply.

Baroness Lockwood: My Lords, this debate is timely, coming as it does just before the next triennial spending review. But I do not want to concentrate entirely on funding. I want to refer to some of the successes of our universities.
	Like my noble friend Lord Bragg, I think that it is quite remarkable that universities are so buoyant and enterprising after two decades of continual cuts in the unit of resource. I remind the noble Lord, Lord Baker, that between 1990 and 1996, there was a 16 per cent cut.
	Therefore, I hope that the Minister can reassure us that the rumour of a further 3 per cent cut is without foundation. I fear that the Government's targets for the participation rate for overseas student enrolment and technical transfer are at risk if that is so.
	I want to refer to two of those targets: first, access. There is still a long way to go in recruiting a higher proportion of students from non-traditional backgrounds, as the report of the Sutton Trust indicated. But the continual growth in the participation rate is encouraging. Equally so is the progression rate. We might remind ourselves that the UK's graduation rate is the highest in the whole of Europe.
	I am proud to say that the University of Bradford, of which I am Chancellor--so I declare an interest--recruits 89 per cent of its students from the state system. It has a progression rate of over 90 per cent, of which 31 per cent are from the bottom three socio-economic classes.
	Widening access is not cheap, nor will it be cheap to reach the Government's ambitious target of a 50 per cent participation rate by 2010. Access students need more preparation prior to enrolment and continual support throughout their course. Bradford has a number of initiatives to help in that respect, including Saturday morning and summer universities.
	I welcome the access funding mentioned by the noble Lord, Lord Baker, which has now considerably increased. But I should like to see it increased even more, particularly to support those students who come from poor backgrounds, have no previous university expectations and, frankly, whose minds boggle at the thought of a debt into the thousands before even starting working life.
	Secondly, I should like to refer to universities' contribution to our economy and competitiveness, which is greater than ever before. Last Friday, I attended the launch of a revolutionary technique in particle design, which will vastly improve drug delivery to patients and will be a valuable asset to a wide range of industries. Blue skies research such as that, with technology transfer, is not cheap either. It is a long, expensive process before the reward justly comes back to the scientist, the university and the UK economy.
	I mention that because I hope that the Minister might remind her friends in the Treasury and the DTI that medium-sized universities like Bradford also lead in some of those fields and would benefit from university challenge funds.
	Another leading field of my university is in the School of Informatics. The first graduates of the Department of Electronic Imaging and Media Communications came through in 1994 and now many are leading entrepreneurs in the multimedia and electronic field. Current graduates are much sought-after recruits by their predecessors, although many, on graduation, go into setting up their own business. Those students rely not on the traditional patenting route but on their own skills and entrepreneurship.
	But there are problems. When students, on graduation, can start up their own business or immediately earn more than their tutors, staff recruitment becomes a problem, particularly at professorial level. I join with those who say that university staff must now be properly rewarded.
	While it is appropriate for some funding to reward access, teaching quality, research and technical transfer, I believe that for a university to be successful in those fields it needs first to be a well-founded university. That is dependent on core funding.
	I urge the Minister to fight hard for the financial viability of the universities and I assure her that they will not let her down.

Lord Butler of Brockwell: My Lords, I declare an interest as the head of an Oxford college. I thank the noble Lord, Lord Baker of Dorking, for initiating this debate. In my experience, his activities are usually life-enhancing and this one is no exception.
	The curious aspect about the recent argument about admissions is that both sides claim to be--and I believe sincerely are--on the same side. Both government and universities want selection of students to be on the basis of ability. They do not want able youngsters to be denied the opportunity of achieving their aspirations because of their race, gender or, in particular, their educational or financial background.
	For the universities, the irritating aspect of the recent debate is to be criticised by the Government who, in some major respects, have made it harder rather than easier to get more state school candidates into higher education.
	The Government are at pains to say that the introduction of the tuition charge and the ending of maintenance grants has had no perceptible effect on university applications. I make no complaint about those changes. As I have said before in this House, I believe that they are inevitable and would have happened under any government. If they bring more money into higher education, they may be beneficial. However, it defies common sense to say that they have not put new obstacles in the way of youngsters from poorer families taking up higher education.
	Here I shall revert to an issue that I have taken up with the noble Baroness, Lady Blackstone. With the help of generous alumni, my college wants to offer bursaries of £3,500 per year to cover the living expenses in Oxford of youngsters from state schools which have not previously sent candidates to us--just the kind of student to whom the noble Baroness, Lady Lockwood, eloquently referred. The purpose of that is to save those students from having to take out the substantial student education loans which may be daunting for families not previously used to debt.
	We ran up against a DfEE regulation which states that if a student has more income from bursaries and other sources than £1,820 a year, their tuition grant will be reduced pound for pound. In effect, we are not allowed to take up the option of doing for poorer children what any well-off family can do for its children; namely, to pay their living expenses and save them from having to take out a large loan. I know that the Minister, Lady Blackstone, is reviewing these regulations. I urge her to apply her political mind and to take the simple and obvious course of disregarding entirely bursaries given to those students who qualify for exemption from student fees.
	Other obstacles lie in the way of increasing the proportion of state-educated students coming to Oxbridge, such as lack of confidence, lack of parent or teacher encouragement and fear of rejection. It is much more in the power of universities and schools to remove those obstacles. I believe that these are more important factors than bias in the selection procedures.
	Last week I happened to visit a non-selective comprehensive school in south Brent. The school has many problems, but largely due to the efforts of the head teacher and her staff, it is a school that has made huge strides over recent years. In 1986 the proportion of students attaining five GCSEs at grades A-C was in single figures and virtually no students went on to university. Now 68 per cent of pupils gain five or more GCSEs at grades A-C and last year, all 45 A-level students gained university places. Oxbridge entry is now becoming regular.
	I met the splendid teacher who acts as mentor for the pupils applying for these university places. He told me of all the work that he has to put into achieving what he does achieve: summer schools, mock interviews, open days and much more. He also told me that since he started this task 10 years ago, all the students he has put up for Oxford and Cambridge have received interviews. Ninety per cent have been offered places. He has not known of a single case in which a pupil has had a bad experience at interview.
	The truth is that the removal of obstacles to all youngsters achieving their full potential needs hard, patient work from all concerned: from universities; from schools and from the Government. A little gingering-up from the Government does no harm, but real progress requires serious efforts and resources rather than words--and certainly ill-founded words. Higher education, like other forms of education, is a very important matter. However, like the noble Lord, Lord Baker, I am afraid that I have to say that I am not convinced that the Government are yet treating the difficult choices as seriously as they should.

Lord Norton of Louth: My Lords, I should declare an interest as an academic at the University of Hull. I note that I have already been preceded in this debate by one Hull graduate and I am to be followed later by another.
	I do not propose to devote time to the issue of university admissions. That, in many respects, is to detract from the problems facing higher education. The Government's stance on admissions is akin to threatening to take a battering ram to an open door. The problem lies not with the process of admissions to the universities, but rather--as has already been mentioned--with what happens before students apply and what happens after they have been admitted to university. The Government are focusing, deliberately or otherwise, on the part of the process that is probably the least problematic. The question of admissions is being addressed. The universities do not need to be told what to do in this respect. They know what to do.
	However, there is certainly a problem at the stage prior to applications. Students coming from particular backgrounds need to be encouraged to apply, to think in terms of taking a degree. Here, families and schools have a vital role to play. Universities themselves are contributing to the process. Through a range of devices, they are encouraging students from backgrounds where there is no history or culture of going on to higher education to apply to university.
	As I have already said, there is also a problem subsequent to admission. This brings me to the central problems confronting higher education. It is these problems that, in the time available, I propose to address.
	Universities are being squeezed by a pincer movement. On the one hand, the number of students admitted to universities continues to climb. There was little change in the numbers during the 1980s and a massive increase in the 1990s. The Prime Minister has spoken of 50 per cent of young adults going into higher education. It is not clear that that is the target, but for my purposes the important point is that we have already seen a dramatic increase in the number of students in higher education.
	However, the resources available to universities have not kept pace with that development. There has been a cut in real terms in the funding per student. The situation is exacerbated by a qualitative as well as a quantitative change. The number of students applying to universities has declined while the number admitted has increased. This affects the quality of the intake. If one reaches out to bring in students who are less qualified than those previously admitted, then this has clear implications for how one is to teach those students. One cannot necessarily rely on existing resources and on current modes of teaching to cope with a growing body of students who do not have the qualifications of previous intakes. In short, the demands on universities are increasing in nature as well as extent; the resources to meet those demands are not. Universities are not going to be able to maintain the quality of teaching, given the failure to provide the resources so to do.
	The position is made worse by the other arm of the pincer. Universities are being overburdened by bureaucracy, with no commensurate incentives to make academic life attractive. Consequently there are problems with recruitment, retention and motivation, as has already been pointed out by several other noble Lords. When last December your Lordships' House debated the state of the universities in Britain, I referred to the new and extensive methods of quality control being applied both in terms of teaching and research. I argued then that they are highly bureaucratic and that they impose a substantial burden on the institutions and those who work in them. Although the methods employed may in some cases be effective, they are highly inefficient. They place a burden on academic and administrative staff that, in many cases, serves little or no purpose. The opportunity cost is substantial.
	These burdens are not offset by any incentives. The sticks get larger as the carrots wither away. Academic pay has declined markedly in relation to other professions. There is little incentive to stay in the academic world, or indeed to enter the academic world, given that the pay is far better in other professions and, indeed, in a great many other jobs. Bright graduates in the City, or in journalism, or in political lobbying, can be earning in their late 20s or early 30s more than a lecturer twice their age is earning. Indeed, they can be earning well in excess of what a professor is paid.
	It would not matter quite so much if the working environment were attractive, but, at present, it is not. Academics are being asked to do more with less. It is no use the Minister talking about a real terms increase in the funding of higher education when the real terms increase in the burden on universities has out-stripped it.
	I suspect--indeed, I am fairly certain--that there is a relationship between the two problems I have identified. If government are not able to provide the funds to meet the goals they would like to achieve, then they look to regulations--to paper exercises--to reach the goals, or at least to appear to be trying to achieve their goals. This is not something peculiar to the present Government. Governments feel the need to be seen to be doing something. It does not work. Indeed, for the reasons I have touched upon, it can be counter-productive. Academics are employed to teach and research. That is what they do well. They are now being given other tasks that get in the way of teaching and undertaking research. They are being denied the resources to do that which they do well. Unless the Government tackle the real problems--and I emphasise "real problems"--then the situation will get very much worse.
	mong other things, fresh thinking in terms of finance is required. My noble friend Lord Baker and the noble Lord, Lord Dearing, have encapsulated the kind of thinking that is required. Leaving matters as they are is not acceptable.

Baroness Warwick of Undercliffe: My Lords, first, perhaps I may join with other noble Lords in complementing the noble Lord, Lord Bernstein, and the noble Baroness, Lady Walmsley, on maiden speeches that were not only interesting but extremely entertaining.
	I must declare an interest in this debate as the chief executive of the Committee of Vice-Chancellors and Principals. I congratulate the noble Lord, Lord Baker, on introducing the debate. It is certainly timely, as higher education squares up to the Treasury in the spending review.
	We last debated the state of UK universities in this House in December, and much has happened in the sector since then. In that debate, I recalled how higher education had been transformed during the 1980s and 1990s; and more recently, we have seen the impact of the Dearing report on the sector. I do not want to rehearse that territory again today, but instead to consider the immediate prospects and medium-term trends.
	Several noble Lords mentioned the recent political and media furore on access and admissions which, I am sad to say, has obscured the true picture of how hard all universities are working to meet the challenge of widening participation in higher education. I said in the debate in December that access is one of the key issues facing universities, and the CVCP wants the debate to look at access for all those who might benefit from university, whatever that university. As other noble Lords have said, that is still a challenge.
	Fifty years ago, we did indeed have an elitist system. Those who made it to university were, largely, sons of the middle classes. In the 1970s and 1980s, the daughters of the middle classes rapidly caught up. But neither the universities nor the schools have yet cracked the problem of raising the aspirations of young people for whom the obstacles of economic and social disadvantage are just too great. Those are the people we have failed.
	Universities are taking initiatives. Many have set up schemes to encourage young people from low participation areas to apply to higher education. I referred to many of those initiatives in the previous debate. But the efforts do not stop there. I was delighted to hear the noble Lord, Lord Baker, refer to the CVCP's report, From Elitism to Inclusion. We are now taking that further. We want to assess how we can do better on part-time and flexible structures and on collaboration between further education and higher education, and how we can engage employers and professional bodies to do more to encourage students from lower socio-economic backgrounds.
	Above all, youngsters who have little or no aspiration, who have negative school experiences and whose families may have long histories of unemployment need to see that education, and indeed higher education, can be fun. But the efforts to raise young people's aspirations and attainment must be joint ones, between schools, parents, pupils and universities, as my right honourable friend the Secretary of State for Education and Employment has emphasised on many occasions. I welcome the recently published Sutton Trust report, Entry to Leading Universities. The report acknowledges that universities are aware of access problems, and that they have initiated programmes to improve access.
	The Department for Education is aware of that too. With the help of DfEE funding, the CVCP has commissioned a report about the way in which universities make decisions about admissions. The project aims to improve the "fit" between information used to make decisions that is obtained from UCAS, which is largely about past achievement, and ways of judging potential. In other words, can we find objective indicators of future success?
	The CVCP is looking forward to working with the Sutton Trust and with the DfEE to find ways of improving the admissions process and to raising performance and expectations in our schools.
	But all of this cannot be conjured from the thin gruel of financial starvation. If the higher education sector is to continue its efforts to meet the Government's goals on access and expansion, adequate funding is vital. The Government have halted the inexorable and debilitating decline of the previous 15 years. But, as so many noble Lords have said, as successful institutions, universities need real investment for growth.
	Next month's spending review may see public funding of higher education cut once again. A cut of 2 or 3 per cent per student is rumoured. That would have a hugely damaging effect on the quality of education received by precisely those youngsters we want to attract to universities.
	The sector is keen to meet the Prime Minister's key target to raise the participation rate in higher education to 50 per cent of 18 to 30 year-olds by 2009, and also, in the international arena, to meet the target of raising the UK market share of international students from 17 per cent to 25 per cent by 2005. But without extra funding, universities will be unable to meet this challenging agenda.
	We have to ask: what will all that do to our ability to contribute to competitiveness? There is a danger that industry will shun our out-of-date equipment, labs and teaching facilities. It operates in the global market-place; it can go elsewhere, and it may well do so. Further investment is required to build our knowledge transfer capacity.
	In order to compete, universities must have their fair share of the best staff. But why become an academic, after several years of study, when you can do so much better--of course, in the City, but also in teaching, in health, in the Civil Service, and in business?
	Everything that we have heard in this debate suggests that UK universities are one of this country's best kept secrets when it comes to success stories. But we cannot depend on out-performing international competitors, even in the medium term, on less and less money. Universities will be crucial both to ensuring the UK's global success in the 21st century, and to ensuring that today's "have-nots" are given a chance to join in our growing prosperity. I urge my noble friend the Minister to agree that a real boost in investment will enable that to happen.

Lord Renfrew of Kaimsthorn: My Lords, I, too, am grateful to my noble friend Lord Baker for introducing this debate on the slow, gradual decline in many aspects of higher education in this country today. In fact, my noble friend did not initiate the current debate, as we well know. It is sad that a senior government officer--I refer, of course, to the Chancellor of the Exchequer--should open the much-needed national debate on higher education in the manner in which he did. It was a cheap diversion from what is certainly an important area of our national life which our Government are in some respects failing. Where is the national vision? If the Chancellor of the Exchequer's contribution is an element of the national vision, heaven help us!
	One issue, of course, as the Chancellor emphasised, is access. The noble Lord, Lord Dearing, is right. Nursery education is a first key, and I am grateful that the Government are making progress in that direction. But secondary education is where the problem of access is most clearly manifest. The question is not, "Why are people in the lower income groups not being admitted to all our national universities?" but "Why are they not applying?".
	I express an interest. I am still a university professor but no longer a head of house. When I had something to do with admissions about 50 per cent of the entrants to the college with which I am associated were from the state sector. That was largely because 50 per cent of the applicants were from the state sector. A general pattern across Oxbridge, and probably beyond, is that the admissions are in general in ratio to the applications. If one wants, as we do, to have more students from ethnic minorities one must encourage applications from ethnic minorities. Why are they not being encouraged to apply? Here the problem lies in schools more than universities. The noble Lord, Lord Plant--we look forward to his speech--wrote in the Guardian a few days ago that he is regularly asked by private schools to talk to A-level classes. In 33 years of teaching he has had one request from a state school.
	That is one place where the problem lies. It is a matter of attitude in the schools and among the potential applicants. I am saddened that by his words the Chancellor has exacerbated the problem and not improved the situation. By enhancing the myth that some universities are difficult to access by, or not suitable for, state students, I fear that he has set back the problem by a couple of years. I think it is a scandal that he should have done so.
	Perhaps I may give a view from the inside on two issues and echo some of the points made by my noble friend Lord Norton. On the financial side, clearly academic salaries are a scandal. However, perhaps it does not come well from someone whose principal income is in that direction to say so too emphatically. My noble friend Lord Baker, and the noble Lord, Lord Bragg, made those points effectively, as did the noble Baroness, Lady Warwick. I refer not only to academic salaries but also to capital expansion. There are the problems of student funding, the funding of libraries and laboratories and, above all, research.
	Many academics spend many hours writing applications to research councils and boards such as the ESRC, NERC, SRC and AHRB. Many applications receive alpha ratings but few are funded. One of the sad factors in university life today is that many excellent, alpha-rated research applications are not being funded. I strongly believe that one of the excellent features of our universities is the research component. I believe that good teaching is related to good research. It is a scandal that research is so seriously under-funded.
	In yesterday's edition of The Times there was a letter from the President of the European Physical Society referring to an international evaluation and emphasising the inadequate level of research funding in British universities. If one wants to start, I agree with the noble Lord, Lord Dearing, the nursery end is one place; but the research end is another.
	I wish to raise one further issue. It echoes the point made by my noble friend Lord Norton. I refer to the bureaucracy which now strangles the unfortunate teachers in the university sector--under-funded, under-provided for, under-financed. There are mountains of paper work. I have referred to research applications. It is far more difficult to get a good grade research application funded; it is also far more laborious to apply for the money.
	The research evaluation exercise determines the funding which comes to university departments. In principle, it is excellent. It is right that departmental research should be evaluated. In practice, it is extremely burdensome. It has set up an artificial market in transfers between university departments in order to meet the annual deadline. That is false and rather foolish.
	It is right that teaching quality should be assessed, but I assure noble Lords that it makes for a mountain of paperwork. Many departments now employ a full-time administrator to prepare the paperwork. The Government are creating a new profession--bureaucratic administration.
	I turn to transparency. Before 24th June I have to fill in a form indicating not the number of hours but the percentage of my time--I have no idea what it is supposed to signify--I have spent on research, administration and so on.
	The merits of the Institute of Learning and Teaching--we have to thank the noble Lord, Lord Dearing, for it--are obscure to me. The Quality Assurance Agency is introducing benchmarking. The dead hand of bureaucracy is falling upon British universities. That feature is almost as serious as the chronic under-funding. Where is the vision? I have been to the Millennium Dome three times. I have looked at the Work Zone; I have looked at the Learning Zone. The Government are not offering us any vision in this field.

Lord Bach: My Lords, we have many speakers in this important debate. Because there are so many speakers, noble Lords are limited on the whole to six minutes. I hardly need to remind noble Lords that when the clock indicates the figure six they are then starting the seventh minute. Therefore noble Lords should aim to sit down when the clock indicates the figure six.

Lord Morris of Castle Morris: My Lords, noble Lords would not think it if they read the newspapers, but there are more important matters requiring attention in our universities than the medical school quota for Magdalen College, Oxford. That incident was neither typical nor emblematic, and the sooner it is forgotten the better.
	I also find myself profoundly unimpressed by any suggestion from noble Lords on the Benches opposite that this Government have not made spectacular improvements on the torpor of their predecessor in providing for universities. I think of four aspects in particular. First, thanks to the measures which this Government have introduced, access to all universities is now much wider and easier than it was under the previous administration. Secondly, student numbers have expanded in each of the last two years, this year by nearly 5,000. Thirdly, research funding has increased by £1.4 billion since the last Comprehensive Spending Review. Fourthly, there has been an extra £1 billion for higher education in this Parliament, an 11 per cent real terms increase.
	These are notable successes, and there are more to come, but, like the noble Lords, Lord Norton of Louth and Lord Renfrew of Kaimsthorn, I want to draw your Lordships' attention to that one deeply debilitating fact of university life: the exponentially increasing, incessant demand for information, statistics, reports, corporate plans, strategic plans, revised financial projections and so on, which strangle research and weaken teaching. Much of this demand comes from the funding councils and their progeny, and so it cannot be resisted, postponed, or consigned to what computers call "trash", because if any institution does not fully, fairly and immediately comply its grant stands in peril. Perhaps I may offer just two examples.
	One great northern university has just endured and survived its "Continuation Audit" by the QAA. This happens to every university every five years. To prepare for it, and to undergo it, occupied a substantial part of the senior management team for most of this year and required a continuous correspondence and assemblage of information. The best result that the university can hope for is a statement that its teaching is jolly good, the worst result that it needs to improve. It is widely believed--I hope that my noble friend will be able to tell your Lordships whether or not it is true--that no department in a British university where departmental teaching quality is rated on a scale from nought to 24 has yet scored less than 20.
	In another well-known southern university the Faculty of Mathematics was audited last year and had to set aside one entire lecture theatre to accommodate all the box files of information demanded by the inspectors, and there is no evidence that any of it was ever looked at.
	It is true that the QAA itself has been uneasy about the havoc it has created in one university after another, and it hopes to move to a "lighter touch" system in two years. But two years is a long time and a "lighter touch" can mean anything or nothing.
	Quality assessment of university teaching is a very difficult art and the QAA certainly needs all the help it can get. This is the problem throughout the whole system. The English Funding Council has a long history of appointing non-experts. It has taken its responsibilities very seriously and demanded to be informed before it takes decisions. Quite right! But its forebear, the University Grants Committee, was made up of experts in university education. They did not need to be taught what questions to ask because they probably knew most of the answers. Universities trusted them, although we also feared them. A UGC visitation under the chairmanship of Sir Peter Swinnerton-Dyer, or Sir Edward Parkes, or the late and much lamented Lord Dainton, was an experience few of us will ever forget or recover from. But, above all, it was assessment by our colleagues and peers and we trusted them.
	In the 1990s, the Conservative government developed a rooted objection to appointing experts to anything. So trust was lost and we in the universities had to teach our grandmothers to suck eggs before the government graciously informed us how much money we could have. Things are better now than they were in the 1990s, but the Secretary of State could, if he were so minded, improve university governance even more by appointing experts--academics actually doing the job--to the funding councils and their subsidiaries to break up their bureaucratic log-jam and liberate the universities.
	Meanwhile, the universities will, of course, respond to all government demands, though with a rich mixture of compliance, scepticism and contempt; or, as T.S. Eliot so notably put it, remembering the words of Nehemiah the Prophet,
	"The trowel in hand, and the gun rather loose in the holster".

Lord Weidenfeld: My Lords, first, I congratulate the two maiden speakers on their contributions. They were thoughtful and stimulating, but in particular constructive and concrete.
	I want to deal with one aspect of the debate centring on the alleged elitism at Oxford; that is, its damaging impact on foreign opinion. Even allowing for the fact that some ministerial utterances might have been made in the heat of the moment and that they did not imply a deliberate denigration of standards at Oxford nor a lack of recognition of the need for having world-class universities in this country, there is no question that the whole atmosphere surrounding the debate, the soapbox tone of some of the media, has triggered a serious suspicion abroad, especially in Europe, that there may be something rotten in the affairs of Britain's centres of excellence.
	Perhaps I should declare my interest and say that for 10 years I have been actively involved in the development of European studies at Oxford. I am in continuing touch with philanthropic foundations and other sources of sponsorship, especially in Germany. I can assure your Lordships that this debate has harmed Britain's image and that a distorted picture has gained credibility that the British Government, no less, are not only dissatisfied with recruitment methods, but also with standards of teaching and the future prospects of our oldest and best-known universities.
	I assure your Lordships that voices abroad--actual and potential sponsors--suggest that perhaps the United States offers not only better career prospects and intellectual resources, but also a calmer atmosphere and public acknowledgement and recognition. As your Lordships may know--and the noble Lord, Lord Dahrendorf, spoke of it most knowledgeably--there has been a soul-searching debate and discussion in most European countries about declining standards of tertiary education. Yet in Germany, Italy, Spain and Austria--to name those countries of which I can speak with personal experience--there is an acerbic and self-castigating criticism about such issues as the size of classes and universities are described as "knowledge factories". But it is the tutorial system of Oxford and Cambridge, and indeed the congenial atmosphere of about a dozen other British universities, which are constantly held up as desirable examples to follow. In fact, today the number of foreign students in Oxford is constantly growing. There are now more German undergraduates in residence than Americans. At the same time, the fact that the number of postgraduate American students is constantly growing confirms the perception that even undergraduates from the leading Ivy League colleges feel that they can greatly profit from postgraduate study and research at Oxford.
	As for the charge of Oxford's deliberate discrimination in favour of applicants from more affluent social backgrounds and public schools in this country or their equivalent abroad, I am sure that other noble Lords will share my experience that that is wholly unfair. I happen to have first-hand knowledge of the exact inverse version of the Laura Spence case, which must not be allowed to become the Dreyfus affair of British academe. The son of one of the best-known philanthropic families on the Continent and benefactors of Oxford, who could prove excellent academic references, applied for admittance to one of Oxford's poorest colleges and was rejected. Soon afterwards, he was accepted by one of America's leading universities and three years later graduated summa cum laude. The exact opposite.
	It is greatly hoped that the debate, for which I am grateful to the noble Lord, Lord Baker, will defuse the situation and that the Minister will allay some of our misgivings. But it is important to realise that after such acrimonious discussion some damage remains. It is damage in the form of bitterness in the academic community, damage abroad and, not least, a residual sense of confusion among potential applicants from state schools as to whether they are after all wanted at Oxford and Cambridge.
	But, as has been stated in the debate by several noble Lords, the root cause of the whole vexed question remains the need for a radical overhaul of secondary education; the levelling up, not down, of standards and social accessibility. Ultimately, the whole controversy strikes at the very root of the problem of academic freedom; the freedom of a university to choose the best human material and offer the best teaching resources for the brightest and the best, as befits a truly meritocratic society.

Baroness Park of Monmouth: My Lords, I have two concerns today. The first is to set the record straight about the government-created myth of Oxford's exclusive class-based culture. Nothing could be further from the truth. The other is my growing concern about whether our children have much hope of being truly educated at all if the plethora of management organs are to have their way--from the Quality Assurance Agency, which wishes to replace first and second-class degrees with "records of achievement"--rightly repudiated by the CVCP--to the Stockport College, Manchester, which in a remarkable set of rules for staff and students (Equal Opportunities, Politics into Practice) has barred the word "history" because "some find it sexist". As the dictionary defines "history" as:
	"a continuous methodical record of important or public events",
	deriving from the Greek historia, I found that difficult to understand until I realised that for the writers of the rules of this temple of the new erudition, "history" is "his story". It should presumably be "her story".
	However, my main concern is the perception of Oxford, that infinitely valuable place. The Chancellor of the Exchequer approvingly quoted The Times' view that the class system remains entrenched in British education. I agree, but it is not to be found in Oxford and Cambridge, whose elitism is a quest for excellence rather than a social evil, but among all too many teachers in the schools.
	Had I not won a state and county scholarship, I could not have gone to Oxford from my excellent state secondary school in London, for we had no money. It had never occurred either to my teachers or to me that I should not try for Somerville and I found not a few other state scholars in my year. However, when I became Principal 40 years later, I met candidates who had been actively discouraged by their teachers from applying on the ground that Oxford was not for them. One gifted entrant, when she came up, came only to say that she would not be staying. Her teachers, who had not wished her to apply for Oxford, had dubbed her publicly as a class traitor when she won her place. More, they had visited her parents the week before she came up to warn them that once she had gone to Oxford they would not be good enough for her; they would not see her again. She was the first of her family to go to university and their distress was such that she felt she could not stay. I persuaded her to invite her family up soon to meet her friends and share her experience with them. She did so, to good effect, and she stayed, doing extremely well and going on to a highly successful career.
	Although I encountered a similar prejudice on other occasions, as did many of the undergraduates who, in my day, visited comprehensive and inner city schools to talk about Oxford, I hope that, with the exception of the Chancellor and some others, that inverted snobbery is less prevalent today. However, it is still part of the problem. The issue is not the failure or refusal of Oxford to admit well-qualified candidates from the state sector; as many noble Lords have said, it is the failure of many such candidates to apply.
	One reason for that is still money. Despite anything that the prospectus may say, many potential entrants believe Oxford to be more expensive than other universities and the fees to be higher. They are not. Neither is it a failure by the university and the colleges to go out to the schools to tell them what Oxford can offer. Even in my day, 20 years ago, we had open days, a scheme for undergraduates to visit schools and regular dinners for school teachers, and I visited and spoke to many schools.
	Today, the campaign to encourage state schools to send their children to Oxford takes a massive amount of the time of tutors, overworked and monstrously underpaid as they are, and those whom they teach. In Somerville alone, the JCR admissions officer, a second year student reading law, has just returned from a tour of the North East, organised and funded by the Oxford University Students Union and the university as part of the Target Schools Scheme. With a group from other colleges, she visited schools and talked to sixth-formers and to teachers, answering questions and describing the interview process, which rightly she regards as helpful, not inimical. Last year a similar visit took place to Birmingham schools.
	The university, OUSU and the colleges all produce a great deal of literature for candidates, including a special booklet on interviews, to make the process yet more transparent and to reassure. Under the access scheme, undergraduates, particularly those from ethnic minorities, visit inner city comprehensives which have never sent anyone to Oxford.
	However, I believe that the most urgent group to target and educate may be the teachers, and Oxford tries hard to reach them. The Sutton Trust runs a teachers' in-service week, but the colleges have important initiatives of their own. The difficulty is to persuade teachers to come. That may be a problem which relates both to time and money but, even so, the response is disappointing. Somerville runs an annual conference for teachers from state schools, each year focusing on a particular subject. The last, at Easter, was on the impact of the most recent post-A-level reforms: 2,493 invitations were sent, asking for written comments from any who could not attend. Two hundred replied and 70 came. Some felt reluctant to attend an elitist institution.
	The sad thing is that such meetings should provide an excellent way to dispel misunderstanding, such as the all too prevalent view that no candidate who has not been specially coached to deal with esoteric interviews can hope for a place. Overworked teachers are likely to be reluctant to take on that extra burden and to offer special treatment to one or two candidates in a large sixth form; nor do they understand that the interview gives a candidate far more chance than pure paper selection to make an individual mark which has nothing to do with special coaching and everything to do with character and personality.
	Experienced tutors can learn a great deal from interviews. I remember that our chemistry tutors admitted someone despite a bad performance in the entrance exam because they perceived her real quality and found out that she had had, at a time of much upheaval in school, nine supply chemistry teachers in one year.
	The universities do not need lessons in how to tell schools and teachers what they have to offer. However, something needs to be done urgently to kill the myth of exclusive elitism based on class. One of the problems is that far too few teachers in the state schools today come from Oxbridge. In 1978, 8 per cent went on to teacher training; in 1988, the figure was 3.7 per cent; and in 1998, 2.7 per cent. Therefore, there is no Oxbridge memory in the schools, and that seems to me to be a terrible pity. If the Government want to see more candidates from state schools applying for Oxbridge, and for Oxbridge to survive, they might try some really well-funded action: support for academics, scholarships and action to enable teachers to come and listen to the facts rather than the cheap and profoundly ignorant rhetoric of some Ministers who should--particularly a former Chancellor of Edinburgh--know better.

Baroness Uddin: My Lords, I rise to draw your Lordships' attention to the plight of the higher education of children in Tower Hamlets. I want to thank the noble Lord, Lord Baker of Dorking, for initiating the debate. I believe that a brief glance at his record during his time as Secretary of State for Education shows that he did very little to enhance the plight of Tower Hamlets students. I even went so far as to have a brief glance at his memoirs, The Turbulent Years: My Life in Politics, which failed to mention the matter.
	I have spoken to graduates in Tower Hamlets in that regard and their view is that the problem begins well before the higher education stage. In that regard, I agree entirely with the maiden speech of the noble Baroness, Lady Walmsley, which I enjoyed greatly. The students believe that education remains a lottery. Many of them believe in the ideal of equal educational opportunity--everyone should have an equal chance and their educational qualifications should be based on merit, ability and effort. Thus, if a person works hard, he or she should make it, regardless of ethnic or social background.
	Equality of opportunity for all may be the ideal on which the British education system is based. However, it is certainly not the reality, in the experience of pupils with whom I talked. The debate, which largely has been dominated by an analysis of education, concerns the factors which affect the educational attainment of students in schools. Explanations have ranged from stressing the importance of socio-economic and political will through to the home, culture and school. If one compares the most improved school in my area with those which have not improved, the explanation of poverty and socio-economic circumstances does not stand up to scrutiny. Further examination needs to be made of the role of good head teachers and teacher teams, which can make a difference.
	It is now more than a decade since the publication of the final report of the committee of inquiry into the education of children from ethnic minorities, widely known as the Swann report. The previous government introduced the market principle into the education system, in which graduates from areas such as Tower Hamlets never entered the equation.
	The achievements of ethnic minorities taken together are shown to be similar to those of the white population. However, that is misleading when one considers the most recent Policy Studies Institute survey which reveals that, while some ethnic groups are doing better than white students, Afro-Caribbean groups are under-achieving. Pakistani and Bangladeshi pupils are performing no better, although Bangladeshi girls are outsmarting their young men.
	The role of prejudice and racism in that complex pattern is understated. In relation to the differing achievements of certain ethnic minority pupils, some research suggests that social class, gender and ethnic origin all play important roles. The Oxford debate illustrates that. However, the relative significance of those factors is not always clear. The factors affecting British Bangladeshi pupils have been highlighted as poverty and fluency in English. However, studies have shown that that explanation does not apply once the pupils become proficient in English at GCSE and A-level.
	In Tower Hamlets, 30 per cent of Bangladeshi girls and 25 per cent of Bangladeshi boys achieved five A to C grades, compared with 21 per cent of white girls and 18 per cent of white boys. It is claimed that where the home background is not English, pupils are held back. The Swann report found that that was a factor in a small number of cases. If it is suggested that bilingualism continues to hinder our young people in entering higher education, what explanation can be given for pupils who do well in primary schools and much better in secondary schools?
	Graduates say that the answer lies, sadly, in a lack of expectation in many institutions, as well as in the guidance and support that they receive in the higher education institutions. Graduates to whom I spoke said that they felt that the whole education system was stacked against their success. The few who succeed do so because of their own and their families' persistence. Many who succeeded said that it was due also to the individual efforts of exceptional teachers, who made the difference between their success and others' failure. They spoke also of the lack of guidance that they received about possible career paths.
	That was borne out by the recent admissions from the Civil Service, the police, the fire services and the NHS. Even in the private sector there is a disparity in the treatment of ethnic minority candidates and recruits. The graduates say that it is only the educational establishment and local authorities which have not caught up with their responsibilities to provide equal treatment and equal opportunity.
	A number of projects have been set up in the community to address the continuous failures of the statutory educational establishment. They are projects such as Keen Student, Supplementary School, People into Management, network graduate forums and summer universities. I declare an interest in that I have some involvement in those projects. I must admit that we have elites among us, and I have certainly spoken to some. It appears that if they come from Tower Hamlets, even when they have the elite experience of Cambridge and Oxford, elitist organisations do not necessarily wait in the wings with offers of employment. Locally, the drop-out rate remains as alarmingly high as gainful employment is low, and yet we are blessed with thousands of jobs on our doorstep.
	I should like to see a radical examination of the whole system of education in Tower Hamlets. I want to know why our Government are prepared to settle for less in our educational establishments.
	One of the central ideas of the Lawrence report is that the focus of racial equality must take into account institutionalised racism, which is defined as a collective failure. It is the cultural, institutional and professional assumptions and practices--formal and informal--which our children encounter that have such a dramatic effect and impact during their lifetime. The institutionalised racism within education is certainly more detrimental than what happens in one-off incidents.
	Racial equality must mean seriously changing the level of achievement of children from ethnic minorities. It is not about changing attitudes or organisational culture, but simply the delivery of education. Some 10 or 20 years ago I would have tolerated and welcomed a debate about policy and long-term planning and constraints of resources; now it is not acceptable, either to me or to the graduates to whom I have spoken.
	For me, the Lawrence report says that it is the responsibility of all institutions to be accountable to the race agenda. Education cannot hide from its responsibilities. If we continue to ignore what is happening on our doorsteps, I am afraid that higher education will continue to fail not only my children but my grandchildren.

Lord Skidelsky: My Lords, I shall do my best to match the lightning speed of the noble Baroness, Lady Uddin. Debates in Parliament on the state of public services nearly always revolve round a single topic--money. Certainly, that has been the major theme of our discussion today. This threnody for impoverishment has been coupled with another--that is, the lament for vanished independence. Universities and their teachers complain of a growing weight of regulation, and I endorse everything that my noble friend Lord Renfrew said about this earlier in the debate. They are constantly being assessed for their research and teaching capacities, sometimes, it seems, by methods borrowed from Stasi, but which, in reality, are the methods of bureaucracies the world over. According to the results of these researches, money is allocated by organisations known only by their acronyms.
	I should like to stress particularly the connection between underfunding and independence. Underfunding and over-control are not separate; they are twin sides of the same coin. That connection has to be understood if we are to make further progress in the discussion. The brutal truth is that a cash-strapped paymaster is always a hard taskmaster. The increased control is directly connected to decreased funding as governments try to squeeze more value for money out of a shrinking unit of resource.
	Worse still, if the Government pay, why should they not tell universities who to admit and what to teach? In future, grants to so-called elite universities are to be tied, so we are authoritatively told, to their success in achieving the Government's preferred social mix.
	The Chancellor's recent clumsy attempt to make a class-war issue of the Oxford selection system compels us to focus on the real issue in the debate as I see it--that is, not money but independence. Should universities be regarded as autonomous institutions or as agents of the state? This question is constitutional; it is about the way power is distributed in our society. The question, "What is to be done?" matters less in this instance than the question, "Who is to decide what is to be done?". For anyone who stands for university autonomy, for anyone who believes that in the institutions of civil society lie the best protection of individual freedom, there can be only one answer. Universities must wean themselves off their present dependence on the state. That also happens to be the surest way of replenishing their coffers.
	What does this involve in practice? It means, above all, that universities would set tuition fees at any level their markets could take. The right to charge a market price for one's services is a fundamental condition of a free economy and a free society. It was only in the communist world that such rights were systematically denied.
	The predictable response to this is that any step in this direction will deny young people from poor families access to university education. There is something in that argument, but there is also a great deal wrong with it from an economic point of view. There is no reason why the borrowing power of poor students should be any less than that of better off ones. A university degree confers an earnings advantage which accumulates to £400,000 on average over a working lifetime, irrespective of parental background. To secure such a return on most investments one would have to borrow about £100,000. By comparison, to borrow £30,000 for an investment in a university education is an astoundingly good buy.
	Of course, that is not the end of the story. For various technical reasons, banks would need to be insured against the risk of default, and both the Government and the universities might wish--I would support this--to provide bursaries to ease the passage of poorer students into university life. Governments would also continue to finance research of national importance. All that I take for granted. Simple changes in the charity laws would enable the universities to tap large additional sums of private money--the lack of which was lamented by the noble Lord, Lord Baker--as they do in the United States.
	However, none of this will come to pass unless some universities are prepared to go to the Government and say, "Unless we can agree a new constitutional settlement between the universities and the state, we will renounce the block grant altogether and resume our freedom of action." A bold step. Integral to any such settlement the universities may seek would be a "charter of freedom", which would include the right to set fees without penalties--I emphasise, "without penalties"--the right to retain absolute control of their own admissions, and the right to regulate their own standards.
	Will any of the universities have the courage to do this? Probably about half a dozen of the top universities could do it if they could agree on a policy, agree to pool their resources and agree to launch a massive appeal for what I would call an "Independence Fund". Unless some such effort is made, the universities will never escape from their present state of slow strangulation.
	My object in saying this is not that half a dozen of the best universities should go into the private sector, but to force the Government to understand what should be the proper relationship between the state and the university system. It is one thing to sell one's birthright for a mess a pottage, but when the mess is too mean to nourish life, it is time to start remembering what one's birthright was and to start on the difficult task of reclaiming it.

Lord Plant of Highfield: My Lords, I, too, should like to thank the noble Lord, Lord Baker, for his prescience in initiating this debate. I declare an interest: for 33 years I have been a university teacher, including five-and-a-half years, until January of this year, as Master of St Catherine's College, Oxford.
	In my short speech I want to say a little about centres of excellence--or, if you like, elite universities--and to say something about access, on which the controversy over the past two or three weeks has focused attention.
	I am all in favour of centres of excellence or elite universities. They are not identified or determined by ministerial or bureaucratic fiat; they arise out of the talent of the individuals within them--poorly rewarded though it is at the moment--and through the innumerable decisions arising from the research assessment exercise, the policies and priorities of medical charities, funding councils and so on. It is undoubtedly the case that over the past 10 years or so an Ivy League, or whatever one wants to call it, of top-ranking universities, which are able to attain international standards of excellence across a whole range of academic disciplines, has emerged. It seems to me that that is vital to the industrial, business and scientific future of the country.
	But while there are these elite universities--and a jolly good thing too--I am sure that we all agree that recruitment to those elite universities should not be based upon a social elite but upon those who have the standards, the merit and the ability to benefit from the education that the universities are able to offer. I think the case for equality of opportunity in relation to access to elite institutions is fairly straightforward. First, they should be open to all those who can contribute to and maintain the standards of the institutions. Secondly, a large share of the funding for universities comes from public money, which is an echo of the point made by the noble Lord, Lord Skidelsky, either by HEFCE or the research councils and there should be equality of opportunity to gain access to publicly-funded goods if one has the merit or the ability to benefit from those goods. Thirdly, in a democratic society, each individual has a right to realise, as far as possible, his or her potential. Fourthly, equality of opportunity in the sense of securing the best use of talent is almost a definition of economic efficiency in terms of human resources.
	For those reasons I am wholly in favour of equality of opportunity in relation to access to elite institutions. So what degree of equality of opportunity is there at the moment in relation to the top universities? I am sure that all noble Lords have read the Sutton Trust report. The telling point in that report in relation to the 12 top universities is that students from independent schools have a 25 times greater opportunity of achieving places at those universities than those from the maintained sector. Can that be justified on the basis of any principle? It could be justified only if one believed that the recruitment patterns of the top universities mirrored the distribution of appropriate talent among the population at large, and that seems to be factually wrong and frankly absurd. It would make the whole programme of change and trying to raise standards across the range of schools totally pointless. Surely, that cannot be an appropriate principle to justify a disproportionate basis of selection.
	What is the appropriate talent base for the top universities? I think it is to be defined as Colin Lucas, the admirable Vice-Chancellor of Oxford University, has defined it; that is to say, in the case of Oxford, those children achieving three As at A-level. How is the talent of those achieving three As at A-level distributed? Two-thirds of those who gain three As at A-level come from the state schools and one-third come from the independent schools. However, taking Oxford University, because it is one that I know, 53 per cent of offers have gone to state school pupils and 47 per cent to private school pupils. That is definitely an improvement on which the university is to be congratulated, but it still falls a long way short of recruiting from that two-thirds of the cohort of state school pupils with three As. I do not believe that the rate of progress is fast enough.
	It may be argued by some that private school candidates should be preferred because they perform better when they are in the top universities, particularly in the challenging environment of Oxford and Cambridge. But that is not so. Research undertaken by Professor McNabb of Cardiff University, reported in the Daily Telegraph, has shown that for students with identical A-level scores, those from the independent schools were 20 per cent less likely to graduate with a first class degree. That is a very telling statistic. So there can be no basis for a choice on that assumption.
	To echo the point made by the noble Lord, Lord Skidelsky, what can be done? I shall not follow him down the route of privatisation. Quite a lot is being done in Oxford and I believe that the university deserves a great deal of credit for it. I shall not rehearse all those matters again. One very interesting new initiative is that pioneered by David Marquand, the principal of Mansfield College, in relation to further education colleges.
	The crucial area of concern in Oxford must be the interview. It is difficult to see how the university could manage without the interview because of the large number of well-qualified candidates. While it is entirely right to say, as the noble Baroness, Lady Walmsley, said in her interesting speech, that schools should try to develop communication skills, it is also important that the universities that use interviews in their selection process should offer staff who conduct the interviews of young people, who may lack confidence, a good deal of training in interview techniques. On that basis there could be a real partnership between schools, top universities and the Government in trying to achieve a better representation of those who are undoubtedly well qualified to share in the education offered by top universities.

Lord Blackwell: My Lords, given the many distinguished speakers in this debate, I want to focus on three points: two points of principle, which I invite the Government to endorse, and one specific point on business education aimed at the universities themselves.
	The first point of principle I suggest is that the volume of higher education should be based on maintaining high academic standards and not on some arbitrary participation rate. The reality, as my noble friend Lord Baker said, is that participation by young adults in higher education has increased enormously. In the early 1970s it was 15 per cent and now it is over 33 per cent. While we all endorse the principle that all those who can benefit should have access to higher education, it stands to reason that participation cannot continue to increase indefinitely without, at some stage, standards being reduced and students being admitted who may well be better served through work-related training and further education. There is nothing magic about the formula of a three-year degree course in higher education which means that everyone ought to aim for that as their route into adult life.
	The funding crisis, to which a number of noble Lords have referred, is, I believe, partly a consequence of the pressures of funding the growth in the past and the desire to continue to fund growth in the future. That desire for growth is understandable on the part of those in the institutions, but the consequence has been a reduction in the funding per student referred to by my noble friends Lord Baker and Lord Norton. Not only does growth cause funding problems; it can also lead to pressures to reduce standards in order to fill the vacant places that universities fear they may have at the end of the UCAS process.
	While I am concerned that the Prime Minster has set out the target of driving participation up to 50 per cent without any particular basis on which to justify that number rather than any other number, I am also concerned that that may worsen the funding pressures without benefit. Funding may be achieved only by reducing standards and, rather than setting an arbitrary target, I would like the Government to reaffirm the principle that the criteria should be to maintain the current and historic high standards of higher education and to determine volume according to the number of students who are able to meet those standards.
	The second principle is that whatever volume of higher education we provide in this country, admission should be based on open meritocracy and not on arbitrary quotas or social engineering. I believe that meritocracy against consistent high standards is the only fair basis for selection. To include or exclude people just because of the schools selected for them by their parents is to be unjust to children who have worked just as hard as any others to reach the standards expected of them. Equality of opportunity is becoming a much abused term. It can be interpreted to justify almost any intervention, so rather than talk about the equality of opportunity I suggest that we need a ladder of meritocracy that allows young people who have ability, aspiration and motivation to advance on an equal basis whatever their backgrounds.
	As the noble Lord, Lord Dearing, and others have pointed out, trying to shape that ladder at the stage of selection to university is too late. Lowering standards in order to allow more people over the bar is not the answer. It has to start at school level. It is a tragedy that over the past 30 or 40 years we have destroyed so many outstanding selective grammar and direct grant schools that gave so many people the chance of rising up that ladder of meritocracy. I know that many other noble Lords in the Chamber have taken advantage of that ladder in the past. I speak as someone who had the immense benefit of an LEA-funded place at a direct grant school, a full maintenance grant at Cambridge and a private scholarship for postgraduate study.
	School standards is the subject for another debate, but I would like reassurance from the Government that they will not put pressure on universities to distort admission standards away from meritocracy and standards of excellence to try to meet other social objectives. I also ask the Government, in the light of the evidence that we have accumulated over the past two years, to look again at the policy of fees and loans. I believe that there is evidence to show that that policy plays a significant factor in discouraging applicants from disadvantaged groups to rise up the ladder of meritocracy.
	My third point is slightly different and more specific. I should like to ask universities to give more attention to business studies in their agenda, thus raising the professional status of business careers. I think that we would all accept that the quality of business in this country depends critically on the quality of leadership. We need to have the best graduates to have a choice of business-related studies that are seen as intellectually challenging as courses in science, law and the arts. I do not believe that it is the Government's role to regulate this. I agree with my noble friend Lord Skidelsky and others who favour more independence for universities. Having myself benefited from postgraduate business education in the United States--and seen the demand that there is for such education in that country--I believe that UK higher education institutions have been somewhat remiss, compared to the US, in being slow to adapt and recognise the academic validity of university courses and research in areas such as financial markets, marketing, logistics and organisational development and other areas of the curriculum covered in many US universities. It is up to the UK universities--I think particularly of Oxford and Cambridge--to embrace business degrees as a primary offering for talented and motivated students at both undergraduate and graduate level.
	There have been encouraging developments at Templeton at Oxford and the Judge Institute of Management Studies at Cambridge, but there is a lot more that can be done to put business-related studies on an equal academic basis. I look forward to further progress in that area.
	Finally, I join other noble Lords in thanking my noble friend Lord Baker for providing the opportunity for this debate. I look forward to the Government's response on the issues that have been raised.

Earl Russell: My Lords, I, too, should like to thank the noble Lord, Lord Baker of Dorking, for introducing this debate and proving--not for the first time--that gamekeepers make the best poachers.
	I have been over these issues, I think, in every debate in which they have come up since I made my maiden speech on the noble Lord's education Bill in 1988. I do not like boring the House. I do not think, frankly, that I have the hope necessary to go around that course again, so I shall confine myself to one issue: widening access to the universities. I have not spoken at length before on this subject because I still believed that we and the Government had our hearts in the same place. I must declare an interest as a serving university teacher. I also wonder whether I ought perhaps to declare an interest since I have a distinct suspicion that Miss Laura Spence may be my cousin. My great grandfather Spence happened to be a Sunderland docker, so the possibility is slightly more than purely theoretical. But hypothetical interests, like hypothetical questions, do not require answers.
	Listening to this debate, I am reminded of a remark made by the noble Lord, Lord St John of Fawsley. He warned the government, "Do not lose the universities. If you lose the universities you will lose the future". It was the voice of Cassandra, and so it proved. That warning needs to be repeated. I do not suppose that it will be any more use now than it was then, but one must try.
	I have noticed that the anger created by the Chancellor of the Exchequer's remarks is most intense among colleagues and postgraduates who are themselves from working-class backgrounds, because they think that his objective is not to help them but to use them as a political football. Of course, it is the nature of footballs that they get kicked.
	The device of the whipping boy who was whipped for the king's misdeeds when the king was tried is well-known. There is a widespread suspicion within the academic community that the Chancellor of the Exchequer is using universities as a whipping boy for faults which are his.
	There has been talk of incentives to encourage universities to admit more people from a wider range of backgrounds. It really is not needed. If you listen to essays--as I do 12 to 14 hours a week--you do not need an incentive to listen to more interesting essays, any more than your Lordships need an incentive to listen to interesting speeches rather than boring ones. I think that that is in the wrong place. I have observed the broadening of access over 45 years. I see two variables. One is the question of getting people to apply. That appears to me to depend first and foremost on the amount of money available for student support. The Minister knows my view that the amount of student support available is very far from sufficient. This is not just a matter of tuition fees; it is basic maintenance. Tuition fees are merely the lid on the poisoned chalice. Frankly, if I were asked tomorrow by someone aged 18, who could not depend on substantial financial support from his parents, whether he should go to university, I should feel it my duty to advise against it. That is a sad thing to have to say.
	That is the first matter that must change. The other is that the quality of the schools must change. For most of my life the gulf between public school education and state school education has been narrowing. But since about the middle of the 1980s it has been widening very rapidly. This is first and foremost a matter of resources. What I notice over and over again in interviews is the complete absence of a school library. What I look for in an interview is someone who can argue between two conflicting views on the basis of evidence. One cannot do that if all one has heard are dictated notes from one teacher in which the distinction between fact and opinion is by no means as clear as one would wish.
	One cannot select students just on their A-levels. I once marked 36 A-level scripts from one school. The only way that I could tell the difference between them was by the spelling mistakes. It is like selecting junior Ministers for preferment on the hypothesis that they write their own speeches. You need to question them off the brief.
	The noble Baroness, Lady Warwick of Undercliffe, mentioned objective tests. When I was at Yale I sat the scholastic aptitude test before administering the graduate entrance programme. I was relieved to discover that I could just scrape into the department whose graduate programme I was in charge of. One of the questions was entirely about baseball. Cultural bias in objective tests is by no means unknown. There is really no substitute for an interview and an adequate school library. What the Government need to do in this field, as in so many others, is to spend a little more and control a little less. If that message is not heeded we shall remember this as a debate not about the success of fee-paying schools but the success of a fee-paying university.

Baroness Carnegy of Lour: My Lords, the noble Earl has made some very wise remarks, as he so often does. Scotland has been mentioned only once during this debate. It was mentioned by my noble friend Lord Baker. He made the point that Scotland might be the place where the first university breaks free from the stranglehold of the public sector, the stranglehold which my noble friend Lord Skidelsky described so well. I am inclined to agree. I believe that Scotland might be the place to do this.
	The funding of Scottish universities is now a devolved matter. Scottish universities must nevertheless be part of this debate because much of what the Scots Parliament decides for them affects United Kingdom and other students, not just those resident in Scotland. It also affects universities themselves elsewhere in the UK, and indeed Scots who choose to study with them. It must be part of this debate.
	Of all the matters that must most concern this Westminster Parliament, the most important I believe must be what is happening in Scotland on student fees and support. The anomalies created by the Government's decisions before devolution are well known to your Lordships, but the decisions since are compounding the unfairness. Following the elections to the Scots Parliament, the Liberal Democrats, with 17 of the 129 seats, agreed to govern in coalition with Labour on condition that student fees were abolished. The Cubie committee was set up to see how that could be done. It produced 52 recommendations and some 40 of those were accepted by the Scottish Executive, at an estimated extra cost of £50 million. A discussion paper was also produced asking for views on matters still undecided.
	Cubie's central recommendation was no more up-front fees for Scots students in Scotland but that after graduation, once a person was earning £25,000 a year, £3,075--the equivalent of fees elsewhere--would be paid into a graduate endowment fund. That maintained the all-United Kingdom principle, established hitherto, that a degree confers earning power, so those who benefit are asked to contribute.
	The Scottish Executive has abandoned that principle and indeed all equity with the rest of the United Kingdom. It has decided that only £2,000 will be paid on graduation. That will be due on a wage as low as £10,000, except for students from the poorest families who will pay nothing at all, however high their salaries turn out to be, except maintenance. How much the compounded unfairness of all this will deter students from elsewhere in the United Kingdom from coming to Scotland, where they will have to pay full fees, or how much it will deter Scots from going south to universities where they will pay full fees too, remains to be seen.
	Andrew Cubie has said publicly that he believes that the fear of having to repay £2,000 on a £10,000 salary, in addition to any maintenance one may have paid with a loan, will certainly deter some Scots within Scotland from applying to university at all. It has been pointed out to me that because of the various starting dates within the scheme it will be financially advantageous for better off students to go to university immediately, even if they were not going to go in this coming year, while it will pay the less well off to wait a year. They may, in the meantime, of course, decide not to apply at all. That is hardly a good start for Scotland.
	I want to ask the Minister a question on one other point to do with the Cubie report because I think it one which is particularly important for her. The Cubie committee has made a number of important recommendations on student maintenance and cost of living expenses for students. They would affect the benefits system. The benefits system is a reserved matter, dealt with by this Westminster Parliament. Have the Minister and her colleagues here at Westminster begun to look at those recommendations? The matter is fairly urgent because the Scottish scheme is a package and it will not work unless those recommendations play a part. I should be grateful if the Minister could tell me whether she and her colleagues have begun looking at those recommendations, because the benefits system will have to be considered by the Department of Social Security. If she cannot do so, would she be kind enough to write to me?

Lord Hunt of Chesterton: My Lords, I am grateful to the noble Lord, Lord Baker, for introducing this debate. My recent experience of higher education in the United Kingdom and abroad has been as a professor and as a recruiter of excellent men and women graduates, as chief executive of the Meteorological Office and director of a consulting science-based company in Cambridge. I declare these interests. I have also been involved in discussions about the content and standards of degrees as president of the Institute of Mathematics and its Applications.
	As a result of government policy and by their own efforts, UK universities are now graduating more students per head of population than most other countries in the world and are attracting increasing numbers of overseas students to the UK for courses that cover a wider range of basic and applied subjects than is available elsewhere. The universities should also be commended on having undergone the same remarkable managerial transformation as other parts of the public service in the UK. With almost no training in management, accountancy and so on, academics running departments in universities now know the cost of staff, equipment, buildings and the income they generate from teaching and research. As a result, many decisions about staff duties as between teaching and research, appointments, salaries and resources are taken quickly and at the level of the department.
	One has only to compare with other university systems in both America and Europe to see why our universities are quite efficient and spend relatively much less on administration. The structure we now have in the UK is broadly sustainable, and I trust that the Government will not be changing it radically. I do not believe that the evidence supports the conjecture of the noble Lord, Lord Baker, that the organisation of the better funded American universities has much to teach us. I know where I would rather be a professor, and fill up fewer forms.
	However, if universities are to increase further the number of students being graduated while improving standards, more resources are needed especially for the infrastructure of the buildings, libraries and scientific equipment, and for staff salaries. Here comparison with North America would show that most libraries in state universities there are better resourced than those in many leading UK universities. As for the state of some buildings in our universities and even teaching hospitals, your Lordships would not want to see them.
	Because of low salaries, outstanding scholars and teachers are leaving or are not entering universities. Their levels are not competitive with those in the Civil Service, let alone the private sector, and yet most academic staff are working a 50 to 55 hour week, as recent surveys indicate, with no overtime payment. On the Continent there is generally a connection between academic and Civil Service salaries. Surely that provides a reasonable basis for comparison. The Bett report endorsed the concept of a general salary structure with local and personal variations. I hope that the Government will provide more funding and guidance than they have hitherto.
	As a result of managerial reform, the Treasury can be assured that public money is spent responsibly. Average student/staff ratios have increased from about 9:1 up to 17:1 over the past 20 years and therefore it will be very difficult for universities to find further 1 to 3 per cent efficiency savings per annum, as they are being urged to do by the Government. As with other organisations in the public and private sectors, such further savings can come only from structural changes. In the university that would mean significant changes in teaching methods. All those concerned with universities, including the Government, need to consider this question. For example, will it lead to less tutorial work and more large lecture classes such as are standard in American universities, including the very best?
	Whichever solutions are reached, it is essential for the UK economy that our graduates are as good as those in other countries. But we should not forget, as perhaps we have today, the higher ideals of university education to form graduates who will lead fulfilling lives and contribute and provide leadership to society.
	To meet international and European standards in science and engineering, many UK universities have introduced four year degrees. Nevertheless, some foreign governments, multinational companies, academics and professional engineers have expressed concern about the level of certain first UK degrees, and also about the level of UK professional qualifications in relation to those on the Continent. Considerable ingenuity and leadership will be required by the Quality Assurance Agency and the professional institutions to introduce different and appropriate levels of technical qualifications. The comments of the noble Lord, Lord Trefgarne, are quite applicable.
	At the same time as increasing the number of students, the Government Chief Scientist, Sir Robert May, has pointed out that scientific research in UK universities is world- class and very cost effective. That is helped by the research assessment exercise, which has been criticised during the debate. It encourages staff to re-energise their research careers and also redefines the roles of those not engaged in research.
	As for funding of research, the substantial recent increase provided by the present Government was an essential first step in slowing the relative decline of the total volume of UK research in universities. Nevertheless, there remains concern about the future position of UK research, as other countries, especially the United States, are increasing their funding of scientific research faster than here, especially in almost all fields of science, engineering and medicine. It is worrying that, as the Royal Society noted, there is a planned reduction in research by government departments and agencies. This source of funding plays a crucial role in stimulating applied research and high technology industry in the United States.
	In the United Kingdom the research community agrees with the noble Lord, Lord Baker, that a good proportion of government revenue from new developments in science and technology, such as licensing of wavebands for mobile phones, should be ploughed back. Games theory and economic research at University College London helped the Government devise the ingenious arrangements for the bidding process. This is a clear example of the ever-wider role that universities are having in our society. This will flourish, provided they have the resources and encouragement from supporters everywhere, including, of course, in this House.

Lord Chilver: My Lords, this debate has already identified a score or more of serious concerns from all sides of the House about the state of higher education in the UK. Before adding to those concerns I should like to preface my remarks by referring briefly to the international scene in higher education.
	In that world scene there is a progressive movement towards a greater diversity of both institutions and styles of higher education. This is leading to the wider accessibility of higher education involving new forms of communication and research. One of the most significant recent developments is the setting up of world universities on the Internet. These new universities offer access to very large numbers of students from many countries at very low cost. Such universities are truly international and can operate freely across national boundaries.
	Across the world higher education forms the apex of the tertiary system of education. Leading institutions of higher education are those which exercise autonomy in their policy directions, manage their own affairs and enjoy intellectual freedom in their work. Autonomy and intellectual freedom lead to high qualities of academic achievement in the forms of knowledge and science which are universally valid.
	It is often argued that higher education in any country is a key force in that country's economic development. Among the present members of the European Community, Denmark and the United Kingdom have comparable participation rates in tertiary education of between 45 per cent and 50 per cent. At the same time, GDP per head of the population of Denmark is 70 per cent greater than it is in the United Kingdom. While there is no direct correlation between the levels of tertiary education and simple economic indicators such as that, it is entirely proper for an intelligent society to seek to understand why the same quantum of tertiary education at least appears to be so much less effective in the UK than it is in Denmark in economic terms.
	That having been said, the arguments for the progressive expansion of higher education are strong. Not least at the highest levels, higher education plays a key role in raising the general educational standards, through the dissemination of ideas and knowledge.
	Over the past few decades higher education in the UK has evolved considerably. Across the universities the balance of income between government and non-government funds for some of the leading institutions has changed markedly. The non-government funding of universities in teaching research rose to £2 billion in 1997-98 and it continues to grow. Unfortunately, the bureaucratic control that government have over the universities as a whole tends to a uniformity of the institutions concerned rather than encouraging innovation. I have already mentioned as an example of innovation the development of major world universities on the Internet. It would seem that there is no major initiative in Britain at the present time to encourage universities and others to explore these Internet possibilities seriously. So much for the Government's priorities of both education on the one hand, and the e-world developing around us on the other.
	If central control of leading institutions of higher education is continued, there is a serious danger that the standards in some of our leading universities will be affected adversely and their roles in the international scene will be impaired. An alternative for those institutions which are only partly dependent on government funds is to give them more autonomy from central bureaucracy to enable them to develop as European and international leaders in higher education.

The Earl of Longford: My Lords, my main excuse for offering a few thoughts today is that I want to say something about the polytechnics.
	Before coming to that subject, I should like to speak about Oxford, so beloved by so many of us who were there, and resented, I am afraid, by some people who were not. At any rate, I should like to say a few words about Oxford as an old Oxford don, Oxford father, Oxford husband, Oxford grandfather and so on. I certainly can claim to be, if nothing else, an Oxford person.
	I want to say two things about Oxford. First, in all the years I have known it, I have never known it to have any prejudice against people who came from humble backgrounds. I shall mention only one person, who, it may be said, was rather exceptional: Professor A.L. Rowse, who came from one of the poorest areas of Cornwall. Many other examples could be given.
	I leave open tonight--although we shall have to return to it again and again in these debates--the question of how far an advantage should be given to people with disadvantaged backgrounds. If some rather feebler version of the late Professor Rowse arrived on the scene in a competition for the last place with someone like myself, with a background of Eton and Oxford, and we were about equal, should the place go to him? If in fact I were a little ahead of him, should it still go to him? If we are to try to secure a higher proportion of people from state schools, we may have to give a positive advantage.
	After all, people do not pay thousands of pounds for the so-called best schools without expecting some advantage. They certainly get one. The noble Baroness the Minister may not have the figures, but no doubt there are figures showing the ratio between teachers and pupils in state schools compared with the private schools. The only ones that I have investigated suggest that the ratio of teachers to pupils in the private sector is about twice as good as in the public sector. That would not apply to every school, of course, but by and large it is so. People pay a great deal to gain an advantage for their children. Should we then discount that? I leave that question open.
	I pass on to the polytechnics. If on the last day, which may come rather sooner for me than for some others present, St. Peter asks me "Did you do any good down there?" I shall reply "At least I was the first person in Parliament to propose that the polytechnics should be made universities". It is particularly appropriate to discuss polytechnics today, because the noble Lord, Lord Baker, will go down in history as the man who turned the polytechnics into universities. It was Lord Baker who did it, but he is too modest to talk about it.
	Everybody seems to refrain from talking about the polytechnics and instead discusses the universities and whether ethnic minorities have a chance in them. They neglect the fact that in the University of Westminster, for example, almost half the students come from ethnic minorities.
	We must pay attention to the polytechnics. In 1992 they were put on more or less the same footing as the older universities. They were given the power to grant degrees, and they are now called "universities"; they are not "polys" any more. All that is a great step forward. However, we may wonder what the result has been, and so far as I know no one has produced any kind of expert measurement of comparative performance.
	Most people will agree--I hope everyone here will agree--that the polytechnics have been a great success. I hope that includes the Minister who, in my eyes, is the most distinguished educationist of any Minister of the Crown that I can remember since my old warden, H.A.L. Fisher, who was a leading academic and then became Minister for Education in the government of Lloyd-George. If that is her opinion, I hope that she will say so clearly. The old polytechnics still have a bit of an inferiority complex, and that is understandable. So I hope that the Minister will say some encouraging words to them.
	I may be a little biased in favour of the University of Westminster. It did me the honour of making me an honorary doctor, and I am sure allowance will be made for that. But no one can deny that it has received many marks of approbation. Only the other day it won the Queen's Award. I am sure everyone will agree that it is a first class university. We have not heard much about that in the recent discussions. No one pays tribute to the work of polytechnics and they are ignored. So I hope that my noble friend will rectify that.
	Are the polytechnics now on the same footing as universities? They do not believe so and nor do I. I have been briefed by the University of Westminster and do not apologise for that. I wrote to the Minister mentioning the improvements it would like to see made. I shall not trouble to go through them tonight; the question of funding becomes extremely technical. But, having studied the issue again after all these years, I feel that the polytechnics are at a disadvantage in certain respects in regard to funding. So I hope that the Minister will at least say that the Government will give that aspect careful consideration.
	We are talking about higher education in this country. The great advance in my eyes stems from 1992 when the noble Lord, Lord Baker, turned the polytechnics into universities, and we have gone on from there. I hope that, when the Minister winds up, she will give full credit to them.

Lord Oxburgh: My Lords, I, too, congratulate the noble Lord, Lord Bernstein, and the noble Baroness, Lady Walmsley, on their eloquent contributions to our discussion this afternoon. And I, too, must declare a personal interest. I speak from the sharp end as the Head of Imperial College. Before that I was head of a Cambridge college and before that, worst of all, I was an Oxford admissions tutor. Just in case anyone should imagine that the efforts by Oxford to broaden access are recent, as well as I can calculate, it was 35 years ago that my noble friend noble Lady Warnock, who was in her place earlier this afternoon, and I were dispatched by the Oxford college admissions office in a hired car to go and sell the message of Oxford to state schools around the north of England.
	We are at the end of a decade of great achievement during which British universities have expanded at a rate unprecedented in the world. The student capacity of the system has more than tripled in less than 12 years. That has allowed the UK to reach the levels of higher education enjoyed by its main industrial competitors.
	The system is performing well. It has captured approximately one quarter of the world market for students who study overseas. As was remarked, that yields around £2 billion a year in overseas earnings. That figure is welcome but, above all, it indicates that although higher education is available more cheaply elsewhere--notably in the United States and Australia--our universities offer good value. That is the only international measure of quality and value for money that we have.
	International comparisons of university research such as those carried out by Sir Robert May, show that our research universities are among the international leaders and, for the funding they receive, give astonishing value. That research leads to new products and new businesses--in the case of Imperial, at the rate of around one a month. But all that success is precarious. That is partly because of the highly centralised and regulated way that we manage higher education in the UK. There are echoes of the command economies of the former Eastern Bloc, where government determine the number of home students a university may enrol, and fines it if it strays over or under that number. Further, they decide unilaterally what universities are to be paid in respect of each student, and for many universities that accounts for most of their funding.
	The trouble is that that unit of resource has been reduced relentlessly year on year under governments of all complexions. While the overall level of funding for higher education has increased because of expansion, Treasury and DfEE figures show that, in real terms, universities today receive 50 per cent less for each student taught than 50 years ago. Some of that pressure was undoubtedly justified. Some universities were not well run. They are not all well run today. But neither is every business nor--dare I say?-- every government department. But I wish to argue that the level of funding today is such as to seriously threaten the long-term viability of the system.
	Why is that? Although part of the reductions have been taken up by genuine improvements in efficiency, the most immediate effect has been the reduction in staff-student ratios, which simply means that students receive less personal attention. Staff salaries have declined, as we heard earlier this afternoon. Less obviously, but no less seriously, many institutions have chosen to defer items of long-term maintenance and renovation of infrastructure in preference to serving their students less well. And to a degree, the apparent solvency of our university system is in that way spurious. It may well be asked whether all that can be solved with IT and the dot.com technologies. The brief answer is that they allow us to do things differently and more flexibly, but in most cases not more cheaply.
	Although all universities are affected by those difficulties, it is the leading research universities that perhaps feel them most acutely. In every respect they have to compete not just nationally, but internationally, for staff with competitive salaries and, more importantly, with research facilities. Whether we like it or not, those are the flagships of our system. Unless an institution has private endowments or private patronage, I can say from personal experience that it is difficult to fulfil that role at present levels of government resource.
	I am frequently invited to visit the campuses of overseas institutions with whom we both compete and collaborate. I must confess that all too often I am ashamed to issue a return invitation because I know that our general facilities compare so badly and that we show up as the poor relation.
	There is no absolute measure as to how much a country should spend on its universities, but if at least in part the purpose is to help the country compete internationally, a comparison with the expenditure of competitor nations is of some interest. As has already been pointed out, the most recent OECD figures show that, as a percentage of GDP, the UK spends less than half the OECD average per student. Those who find that comparison uncomfortable will say that the figures are inaccurate. That is true, but the difference between our expenditure and that of our competitors is so glaring that the inaccuracies pale into insignificance.
	So, where does that leave us? Although the Government have put additional and welcome money into university research, like their predecessors, they appear deaf to pleas that the university system is under-funded. Universities have achieved increases in productivity that would be the envy of many businesses. They have demonstrated that they are internationally competitive in every respect, and that they offer good value for money. They have generated new sources of income. But they are poorly funded by comparison with their competitors, and they simply do not see how they can make ends meet now. They also carry an increasing burden of un-costed bureaucratic scrutiny.
	If the Government do not believe the universities' case, it is for them to say what evidence they would accept as proof that the universities are bleeding to death. The relentless reductions of the past three decades must be reversed.

Lord Lucas: My Lords, if the Government were to go down the route proposed by my noble friend Lord Baker--and it is one that I find extremely attractive in principle--what else would they have to do? There are at least a few areas where the Government would have to make great improvements in what they and the universities do. Indeed, perhaps the Government ought to be doing those things in any event.
	First, there is the matter of the provision of information for students. Students now have a large financial interest in universities. Certainly, if my noble friend's proposals were to come into effect, they would probably have a rather larger financial interest in paying for their courses and a differential one between universities. But even with the current state of affairs, they deserve much better information than is now available.
	Information on courses--a pretty basic requirement, one would have thought--is, by modern standards, currently provided in an extremely poor form. To obtain detailed information on courses, the student has to pay a very large sum of money; it is not freely accessible over the Internet. It is only available on a private basis from one particular firm. Moreover, when that information is received, it is not well linked with universities' own sites. And when you access those sites they are not well linked with what their professors get up to, their research papers and what the actual experience is of students doing certain courses.
	Any web-based company trying to sell such a product would provide more and better information to students regarding courses in which they were interested. The Government should ensure that that is integrated so that someone seeking, for example, to take chemistry could easily access such information and do so from home and over the weekend. In that way, students could find out what the courses were like, who would be teaching them, and so on.
	Secondly, there are some good publications that cover the sort of "beer and sandwiches" life at universities, so the Government need not worry about that. But following on from what the noble Lord, Lord Plant, said, there is much to be done on value added. It is clear from some studies that A-levels are not the be-all and end-all determinant of how people do at university. Universities ought to be taking a leaf out of the book of what is done in secondary schools, and even in primary schools. They should be using a decent value-added system to get a handle on what it takes for students from particular backgrounds to do well on a particular course. It would certainly be a great source of information for admissions tutors and should be provided to students so that, when entering a certain course, they have an idea of what they are likely to get, and what the university's history is in producing degree results for the calibre of students to which they feel they belong.
	Thirdly, I turn to prospects. At the end of the day, universities are about going on into later life. There should be much more information about what university students taking particular courses go on to achieve. It ought to be possible to see lists of those who attended certain courses during each of the past 10 years, what they are doing (where such information is provided) and perhaps establish links to former students and hear comments from them. That would be an immensely valuable resource for students who were judging whether a particular course was suitable; for example, whether it produced the sort of results required.
	If one looks at further education and considers some of the better colleges that are linked with industries--Farnborough is one that I visited--such information is available to students. They know exactly where all the old alumni are because, by now, they are the people who are recruiting the new students when they come out and, indeed, often before they come out of college. That sort of quality of information ought to be available to students now. It would certainly be needed if the universities were independent.
	We should also have good information provided by the Government in terms of quality assessment. Much has been said about how the present systems feel from a university point of view. Looking at them as a user, I have to say that they are useless. They provide nothing of use to students. I do not know of any school that makes use of its output in any integrated way. What we have is a number of simplistic indicators, which really mean very little, and a formulaic approach to reporting that is obscure and really does not give a feeling of what the course and its quality are like as an experience. People and good admissions tutors rely on their own experience and on person-to-person contact. The reports produced at such great effort and expense amount to nothing when it comes to informing students. Again, there is a great deal that could be done using the world-wide web. In that way you can display information in all its variety and depth and make it available to students. We do not need to have this "condensation" and formularisation, which appears to be the present approach.
	Moreover, we need to take a much more radical approach towards securing student access. It is quite clear that access to the best universities and courses must be open to everyone. I believe that that should be done by allowing the universities to choose what fees they wish to charge, while saying that, above a certain level--the level at which the Government provide funding--they can only charge such fees by lending the students the money to pay them. That would operate on a similar basis to the student loans scheme.
	Universities would have no difficulty in funding the bulk of that cost from the commercial market. That is something the Government should have done ages ago; and, indeed, something that they would have done ages ago if it were not for the dead hand of the Treasury. They should put the whole business of the student loans scheme out to the private sector. It is an enormously valuable loan resource; an index-linked asset just waiting for the life insurance industry to take it, but the Government will not let it go. If individual universities were lending the money to students, they would be re-financing that in the City as rapidly as possible. That would be a source of finance for universities that would not harm the ability of poor students to get to university.

Lord Sheppard of Liverpool: My Lords, opening up access to higher education is not simply about Oxford and Cambridge, important as they are. It is important that there should be universities with the resources to pursue research as effectively as competitors in other countries. Those universities need the ablest students who want to come to them and believe that they can find entry.
	There is an issue, as the noble Lord, Lord Plant of Highfield, illustrated, arising from the Sutton Trust report. What needs to be overcome in many schools is not prejudice but a fear of failure among teachers. Some schools have simply never thought that they could win places. So, the present debate can be very creative if more schools feel that they can encourage able young people to try. Of course, some of the universities are at the top of the pyramid, but to expand opportunities means putting building blocks in place all the way up from the ground and at every level in the pyramid. I want to speak about opportunities rather closer to the ground. The changes of recent years offer excellent education to vastly increased numbers of students. Successive governments should take credit for that development. The noble Lords, Lord Bragg, Lord Dahrendorf and Lord Oxburgh, all pointed out the real success that we should celebrate but also referred to the increased burden that coping with greater numbers has laid upon so many university teachers. We should accept that there are limits to the quality that they can achieve without greater resources.
	The noble Lord, Lord Dearing, recognised in his report the strength in the variety that higher education has to offer. He said that there were different missions and centres of excellence. My inquiries this week in the world of higher education in Liverpool have informed me that there has been a sea change and that there is much of which the Government can be proud. For example, I understand that the Teacher Training Agency pays £6,000 to PGCE students for their fourth year. That has made a significant difference to teacher recruitment.
	I also understand that the funding council monitors postcodes to assess grants for higher education establishments, which I am delighted to hear, as I hope are other noble Lords. The Government should make such steps more public. Sometimes I think that the Government want to do good by stealth and not let too many people know about it. We should not be coy about affirmative action that opens up opportunities. I was glad that the noble Lord, Lord Baker of Dorking, did not shrink from speaking about a programme of positive access.
	I hear that the result of monitoring postcodes is that different institutions now chase students from Toxteth. I hope that they do not simply want the money but realise that they are giving opportunities to people with great intelligence which in former generations has been wasted. That seeking of students shows that government policies can make a real difference.
	My involvement in higher education has been to chair--boxing and coxing with Archbishop Derek Worlock--the council of what has become Liverpool Hope, building on long established Catholic and Anglican colleges. The most recent development has been to establish "Hope in Everton" which is a £20 million development in the north end of inner city Liverpool. Accommodation for PGCE students is on the spot. It introduces them to inner city schools where it is hoped many will make a career. Liverpool Hope also works in partnership with sixth form colleges in the North West, developing a network of Hope colleges that bring higher education within the reach of more people.
	Having seen much of life in areas of high unemployment makes me an enthusiast for "second chance" learning. I know that the Minister shares that enthusiasm. Further education colleges provide a key bridge on which personal confidence is built. Colleges such as Liverpool Hope and many universities open doors for mature students who had never imagined themselves with degrees. Many noble Lords will, like me, have attended graduation ceremonies, for example at Liverpool John Moores University or the Open University. Plainly, many who receive awards are the first in their families to do so and bring special insight and experience as mature students to their education. I hope that we can all rejoice at such developments.

Lord Dixon-Smith: My Lords, I feel some trepidation in taking part in this debate as an East Anglian in what seems to have been very much an Oxford affair. I am grateful to my noble friend Lord Baker of Dorking for an opportunity to improve and continue my education.
	I intend to approach this subject from the bottom up rather than from the top down as most speakers have done. My experience of higher education began more than 30 years ago when I became a governor of what was then a technical college and school of art. I mention just one formative incident from that period. The college sought someone to be head of department in what had then become an institute of higher education. One applicant had left school at 14. He had only one degree; a PhD. We could not resist the temptation to interview him. He explained that he had been invited to lecture at a university at both undergraduate and postgraduate level. A year later the academic authorities invited him to attend an interview which he attended with some trepidation. He said that he was a little bothered that perhaps he was not fulfilling their expectations. The authorities said that the problem was not his but rather theirs. They were rather embarrassed that someone was lecturing at postgraduate level who apparently had no formal academic qualification. They invited him to submit a thesis. He said that when he did there were three people in the country who were qualified to mark it, and he was one of them!
	The important thing to note from that incident is that university education is vitally important and not just for those leaving school. It has continuing relevance much later in people's lives. It is gratifying to note that there is so much more opportunity today for mature students. The institution I have mentioned still takes people in their late 20s and early 30s off the streets, so to speak. After taking the standard course some are awarded a first class honours degree and undertake important research work.
	The Institute of Higher Education was formerly controlled by local authorities, as indeed was all public sector higher education in former times. However, in the mid-1980s institutions could escape that control if they had a sufficient proportion of public sector higher education students. They were allowed to incorporate. The institution with which I am involved incorporated at one minute past midnight on 1st April of the relevant year. One minute later it amalgamated with another institution. The noble Lord, Lord Baker of Dorking, will recognise that process. A few months later we scraped over the hurdle of 4,000 full-time students in higher education and became a polytechnic. In the early 1990s the law was changed and that institution became a university, although not willingly as it rather enjoyed being a polytechnic. The polytechnics became universities as, particularly abroad, no one understood the distinction between a polytechnic and a university. That was something to do with the Common Market, and we all know where that gets us!
	Today that institution has 20,000 students and is doing well. It is a good regional university. The institution came about because it was able to escape the controls which were formerly imposed by local government. Today university funding and quality control have reasserted the intrusive controls from which the university with which I am involved escaped just a few years ago. The annual fight for funding takes up more and more time in administration. The Quality Assurance Agency charges huge sums of money. A single audit for a single department now costs the university £350,000. We have several of those audits every year. That money would be far better spent on students and student facilities.
	Real problems exist. The plea of the noble Lord, Lord Skidelsky, that universities should stand on their own feet and become independent, has real resonance at the present time when the system--disregarding the simple matter of funding--is becoming too intrusive and is exercising too much control. The noble Lord, Lord Baker of Dorking, called for boldness of action in the development of the university sector. I lived through a process of continuous change. We did not expect to end up as we have; we always expected to trip up. However, we got there. But having done that, it is sad to find that the system is now slipping back into the controlling, intrusive and awkward system from which we thought we had escaped.

Lord Desai: My Lords, I thank the noble Lord, Lord Baker, for initiating the debate. I missed the debate that took place in December but I am glad to be able to attend this one.
	Oxford has an elitism problem; I have never heard the like. A careful study of Prime Ministers since 1945 will show that if you want to become a British Prime Minister you should either have an Oxford education or none. There has never been a Cambridge-educated Prime Minister, and the LSE has only made it with Jim Hacker. Therefore, we all have a right to complain.
	I, like Laura Spence, applied to go to a British university 40 years ago--it was at Peterhouse. I was not interviewed because I was in Bombay at the time. I did not get a place and I do not know who was luckier. I did get to the United States of America, where I had full tuition and a full fellowship. The point about the Laura Spence case is not elitism but that there are universities which can fund students fully. We have failed, not because of the type of schools which people attend, but because we have failed to tackle that problem.
	While the going was good--and I started my university life here in 1965 when it was--we did not worry about money at all. Students and teachers did not worry about money. Money was always there. Then something went wrong. In my first 15 years I did not worry about money, although salaries started to be frozen in the 1970s. The noble Baroness, Lady Thatcher, when she was Secretary of State for Education, started asking how we spent our time. We had to keep diaries. All politicians think that university professors are lazy, so they want us to account for our time. They cannot understand that thinking is very hard work. Try it some time; it is very hard. Ever since then there has been a tremendous deterioration in our facilities, salaries and so on.
	As many of my noble friends and other noble Lords have said, we still have a very good higher education system. There is a crisis in the technical, "medical" sense. At this point we have to think about how the system should develop. I shall concentrate on two major possibilities.
	One is to take the current system, stop any further efficiency gains and bootstrap it up. It will cost a lot of money, just as in the NHS, because of the neglect of the past 20 years. Like the noble Lord, Lord Baker, I have amnesia and I forget who was in power most of the time while the money was being cut, but we will let that go. The money has been cut. The unit of resource was £8,000. If one wanted to restore that, plus inflation, it would come to something like £12,000. To go from the present level to £12,000 will not be done quickly; it may not even be necessary. It will take something like 10 years.
	We shall need a bold plan to restore the funding of higher education, on the current basis of access or improved access, and with low fees and so on. We could do that. That is one plan.
	The other plan proposed by the noble Lords, Lord Baker and Lord Skidelsky, says that we should go the private route. I shall briefly wear my economist hat and consider that option. I think that option has great attraction. In the American system a diversity of tuition fees are charged and there is diversity of quality. Indeed, there is a lot of independence, though not a little bureaucracy. As my noble friend Lord Hunt pointed out, there is a lot of form filling in American universities as well.
	What will it cost? The noble Lord, Lord Skidelsky, said banks will have to be made to be bolder in lending money and so on. We know that capital markets are imperfect. Banks do not give loans on future income. If they have to be made to do that, we need supporting mechanisms. Income-contingent loan arrangements to guarantee interest payment is one possibility. For example, as the noble Lord, Lord Baker, said--and I find this an attractive suggestion--if currently £3 billion is being spent on roughly 1 million students (these are broad numbers) each student has an entitlement of £3,000. The Government provide £3,000. One could say that in a new private system anyone can have up to £3,000 as a floor. One may choose to spend less than that and to go to a cheaper university. One may go to an expensive university. But one cannot have more than £3,000. One could bootstrap it in that way and take out an interest-free loan over the period, or whatever.
	I should like to know whether these are the lines along which the Opposition are thinking. I should like the noble Baroness, Lady Blatch, to say whether that is official policy which the Opposition will propose in their next manifesto. It would make for a very interesting debate were the Opposition to put forward a privatisation plan with a loan policy of that kind and were my noble friend Lady Blackstone to go in to bat for the current system of bootstrapping. That would make a very interesting debate which would be very welcome.

Baroness Sharp of Guildford: My Lords, I well remember the bombshell that hit us at the LSE--as I suspect does the Minister--when the noble Lord, Lord Desai, arrived in 1965. I was "gobsmacked" then and I remain "gobsmacked" always by what he has to say.
	I should like to begin, as have others, by congratulating the noble Lord, Lord Baker, on initiating what I think has been a very thoughtful and valuable debate.
	We have also been privileged to hear two excellent maiden speeches, one from my noble friend Lady Walmsley--and I warm very much to what she said about the two Cs, communication and confidence--and the other from the noble Lord, Lord Bernstein.
	I, like many others, also have to declare an interest. Until last year I was a member of the academic staff at the University of Sussex and I retain a part-time appointment at that university. That university has an admirable record in encouraging access from a very wide diversity of backgrounds.
	We have had a very wide-ranging debate, covering a vast number of issues in the higher education field. For someone having to wind up, it is always somewhat difficult to know what to say and what to pick out. I want to pick out three issues that have arisen and talk about them. I want to pick up the point made by my noble friend Lord Dahrendorf about praise for our universities as compared to what he called the "shambles" on the Continent. Then I want to look at the issue of scientific research which, because I come from the Science Policy Research Unit in Sussex, is an issue in which I am particularly interested. Finally, I want to turn to the issue of access that runs through the whole of the debate for many people.
	The noble Baroness, Lady Warwick, talked about our universities as being one of Britain's best kept secrets. I do not think it is a secret. I believe that our universities are one of our best and bravest institutions in this country that have served us incredibly well. This is well known. It is why, as the noble Lord, Lord Oxburgh, said, we have students flocking to the United Kingdom to participate in our universities. Perhaps there is one aspect that is secret. Why do students flock? I shall give your Lordships one example as to why they flock. The University of Sussex has many exchange programmes. I have taught on a number of occasions classes with exchange students. I well remember a French student being absolutely overwhelmed by the fact that in the group of about eight students I was taking--and she called me Margaret rather than Madame Professeur--we had an equal exchange of views. I would listen to what she had to say and participate. She said to me that that was so different from France, that in France there are separate staircases so that the lecturers do not have to rub shoulders with the students. It is the friendly tutorial system which is actually at the root, the secret, of our success.
	When I first went to the University of Sussex in 1981 I was taking what were called tutorial groups of 1:4 and today I am taking tutorial classes, as we now call them, of 1:20. It gives you some idea of the rise in the teacher/student ratio. That is the position now. At Sussex, it is 1:17. That is tough, particularly when there is all the bureaucracy which we have been talking about. Nevertheless, even at 1:20, we are offering those students an opportunity of personal contact with senior members of staff which does not exist in a typical continental university. That is extremely valuable.
	Scientific research is another area where Britain is good, as the noble Lord, Lord Oxburgh, made quite clear. Indeed, we excel at it disproportionately for our size. So there is a secret there.
	The tutorial system is a secret of the success of our teaching. What is called the dual-support system has been the success of our scientific research. That dual-support system provided two things: first, the surety of core funding with which to employ scientists long-term; and in addition, the specific funds for specific projects through the research councils. The combination of those two has led to an excellence of research in this country which is seldom matched elsewhere.
	Sadly, that system has been under gross strain over the past 20 years. Nevertheless, Britain remains outstanding in the production of scientific knowledge. Recent research by my own unit, the Science Policy Research Unit, revealed that in 1997, very recently, a typical academic scientist produced an average of 11.2 papers compared with the United States, where the average academic produced only 9.2 papers. Your Lordships may feel that that is not necessarily the right measure by which to look at the productivity of academics, but that is what is being done these days.
	The noble Lord, Lord Oxburgh, mentioned Sir Robert May, the chief scientist. Sir Robert is very proud of that productivity. Indeed, he goes around demonstrating what good value for money he gets from his scientists. It must be pointed out to him that if you are paying peanut salaries, that helps in value-for-money terms. It looks good in terms of the number of papers that you receive per pound invested. But he is doing rather well. Scientific productivity in our universities is high and we should be proud of that.
	Sir Robert May also likes to talk, as does the Prime Minister, of Britain being the California of Europe. Sadly, we are hardly there, not because our universities are not producing the research but because the business sector lets us down. If business does not invest in research and development and employ scientists and technologists, it cannot make use of the science and technology that we produce. You have to be able to understand what our scientists are saying. Unless people understand what is happening with leading-edge science and technology, that cannot be translated usefully for industry. That is where we fall down.
	If your Lordships look at the statistics, you will see that in spite of the growth in recent years and the success of the British economy, over the past five years, expenditure by British industry on research and development has fallen and it is employing fewer scientists and engineers now than it was employing five years ago. That is a shocking record.
	That research has shown that, as a result, if Britain were a US state, far from being like California, we should be on a par with Virginia and Oregon, hardly the most innovative of American states.
	The report then goes on to point out that things have changed over the past two to three years. In particular, the US, Germany, Canada, France, Finland and Denmark have all made sharp increases in their public sector support for science, as, indeed, has the UK. It acknowledges that. It then goes on to quote a recent OECD report which says that the UK's efforts were "less ambitious" than those of other OECD countries. Of course, the UK had an enormous back-log of neglect over the past 20 years to make good.
	How then do we reconcile high productivity with low investment? Sadly, the report concludes that much of that high productivity today reflects past investments. The average age of academics in British universities is now 48. It concludes:
	"In the current environment of low pay, limited resources, poor morale and casualised labour, the UK researchers may be less productive than their forbears".
	I now want to move onto the issue of access about which many noble Lords have spoken in this debate. I fail to understand why the Chancellor was so surprised about the access issue. Over a long period of time, we have had evidence which has linked educational under-achievement with social background. There is no reason why he should be surprised that the 7 per cent of private schools produce 35 per cent of the A-level pupils and 50 per cent of the Oxbridge places.
	As many noble Lords have pointed out, the scandal is that so few candidates from our state schools achieve the standards required. As the noble Lord, Lord Dearing, said, the problem lies not only with our secondary schools but also with our primary schools.
	Britain alone among OECD countries has seen a falling percentage of its GDP devoted to education. In 1992-93, we were spending 5.1 per cent of our GDP on education. Last year, 1999-00, we spent an estimated 4.6 per cent.
	The percentage of children in private schools in this country has remained remarkably stable at between 6 and 7 per cent. That they do so much better than the state schools at GSCE and at A-levels can be accounted for by two factors: first, social class; and secondly, the fact that spending per pupil in private schools is approximately double that in state schools. It is £5,500 per pupil in private schools, compared with just over £2,500 in state schools.
	If this Government were really anxious to even out the inequalities of social class, one would expect them to spend more rather than less on those who come from disadvantaged backgrounds. But what have this Government been doing to make universities more accessible? They have introduced tuition fees and abandoned maintenance grants in favour of loans.
	Some noble Lords quite clearly understand that if you come from social classes 3 and 4, mortgages of £70,000 or £100,000, let alone the £300,000 that, some while ago, one would have needed for a house in Notting Hill--you would need a lot more--are beyond belief for most of those people. A fear of debt is very deep within them.
	As a result, what have we seen? In England, we have seen a drop in applications. In Scotland, where there are no tuition fees, as the noble Baroness, Lady Carnegy, mentioned, we have seen a rise in applications. In addition, with the advent of tuition fees, we are seeing students working many hours overtime.
	What is the answer to that? We hear about top-up fees. It would be a supreme irony if this Labour Government, who came to power on the slogan "Education, education, education" ended up privatising the lot. Yet that is the way they are going. It is all very well for the Minister to say, as she has many a time, that the issues of university salaries and costs are nothing to do with her. As we have heard today, if our universities are to remain top-rank universities in both research and teaching, they must increase their incomes. I gather that less than 20 per cent of the LSE's income now comes from the state. It is obvious that going private is an option. But as my noble friend Lord Jenkins pointed out, Harvard and Yale are hardly models to be put forward for equitable access. Do we really want to go down the American Ivy League route?
	The answer to Gordon Brown's diatribe against inequality lies in his own hands. He should recognise the logic of the Government's actions to date. All the indications of what they are likely to do in the CSR for universities will drive those very universities out of the state sector and reinforce their social elitism.

Baroness Blatch: My Lords, I, too, wish to thank most warmly my noble friend Lord Baker of Dorking for initiating this debate and, indeed, for making such an outstanding and radical opening speech. Given all that has been said so far, from all sides of the House, it is clear that my noble friend was more than justified in returning to a subject that was debated in this House in December last year.
	Perhaps I may also associate myself with the much-deserved compliments that have been paid to the two maiden speakers. I remember how daunting that experience can be. Their contributions added greatly to the debate and we look forward to hearing from both of them in the future.
	I should like to say to the noble Lord, Lord Desai, that he followed the instructions of the noble Lord, Lord Bach, to the letter. He will have to be very patient, as indeed will all noble Lords, because it is not for me, as a lowly Member of this House, to pre-empt my colleagues in another place.
	It is not possible to cover all the aspects of this subject in the time allowed. Higher education in the United Kingdom is, rightly, admired throughout the world. At its best, our higher education certainly competes successfully with the best in the world. In some ways, the underlying theme of this debate has focused on the degree to which that position can be sustained or even whether that reputation is under threat.
	As I said in the previous debate, a country is judged on the quality of its education, and in particular on the quality of its higher education. When my noble friend tabled his Motion for this debate, little did he know that the Chancellor of the Exchequer, Gordon Brown, would address the issue of access to universities in such a damaging way. He very unwisely personalised his comments by drawing attention to a particular student who was about to sit her A-levels. Equally unwisely, he attacked the reputation of Oxford University without first checking his facts. He went on to compound the problem by engaging his fellow Cabinet colleagues to indulge in various forms of speculative social engineering.
	Given all that has been said, the Minister must inform the House today precisely why it was that Mr Brown described what happened at Magdalen College as a "scandal". Despite the fact that Mr Brown claimed that Laura Spence had the best A-level results, the timing of his outburst was not only wrong, but could hardly have been more insensitive. In fact, Laura was about to take her A-levels. The facts are that all 22 applicants for medical places at Magdalen College had 10 starred A grades at GCSE. Anthony Smith, the president of Magdalen, said,
	"the interview, which accounts for a quarter of the marks we give candidates, was the part Laura Spence did best. She performed less well in the written test, the test of observational skills and the structured discussion".
	He went on to say,
	"We were not convinced that she had the necessary potential".
	Only five places were available for that particular course and a breakdown of the successful candidates shows that three were women, three were from ethnic minorities and two were from comprehensive schools. Where is the prejudice in that? It is also now clear that, had Laura wished to study medicine, places were offered to her at three fine medical schools: Edinburgh, Newcastle and Nottingham. For Mr Brown to criticise the admissions procedures at Oxford, in ignorance, so publicly and using the most intemperate language, was offensive to those who took so much care to recruit the very best students without prejudice as regards their background. I also think that the headmaster of Laura's school, an adviser to the Government, must accept some blame in this matter.
	Sadly, the clock has been turned back to old-style class warfare and the politics of envy which at best serves no purpose at all and at worst belies and devalues the real efforts being made by the universities and others, such as Peter Lampl through the Sutton Trust, to widen access for bright students from all backgrounds.
	Time does not allow me to refer to an excellent paper written by Colin Lucas, the Vice-Chancellor of Oxford University, where he sets out an impressive catalogue of initiatives designed to improve access from state schools. When I read the paper I could feel only anger at the way in which Mr Gordon Brown had wantonly accused a university where the selection process is thorough, impartial and rigorous.
	This is not the first time that we have witnessed the Government's antipathy towards Oxford and Cambridge. It was not so long ago that an attack was launched against college fees, which support the tutorial system. The noble Lord, Lord Puttnam, in a largely agreeable interview last week with me on the radio, said it was because Oxford and Cambridge had behaved so badly. Can the Minister tell the House of what precisely were the two universities guilty? Is that the kind of subjective test for funding that we can now expect to be applied by the Government?
	Under the 1992 Higher and Further Education Act, the Government are prevented from using grant allocation to punish or, indeed, to reward universities on the basis of criteria used for the admission of students. Many have said that we need more applicants from state schools. While that is true, had there been more applicants for places at Magdalen, and had they come from state schools, there would still have been only five places. Therefore, even more young people would have been disappointed.
	Do the Government intend to set a cap on the number of independent school pupils or do they intend to fund additional places at the more sought-after universities? Finally, does the Minister believe that Magdalen College did discriminate unfairly against Laura Spence? If not, the college should receive an apology. Does the noble Baroness think that they will receive one?
	It is timely to pose some questions about the purpose of higher education. Has expansion in higher education gone far enough, or has it even gone too far? The present target is, I understand, 50 per cent of the cohort. The Chancellor, the great egalitarian Mr Brown, has even predicted more. Are too many students being accepted with inadequate qualifications and a poor aptitude for their courses of study?
	What about the expansion of places in further education? My noble friend Lord Trefgarne developed this point very well when he stressed the need for more high quality vocational education. Is the meaning of higher education being redefined by stealth? Is it the intention of the Government to remove the distinction between further and higher education and to create a form of comprehensive post-16 sector?
	Whatever are the merits of the "University for Industry", they do little to promote the understanding of the purpose of a university education when young people with very poor education and skills are recruited from hanging around town centre shopping malls into university. The intention to improve the education of such people is laudable and I support it fully. However, to recruit them into a body called a "university" creates a distortion which only devalues a university education as we know it. I have to say that, over the years, much the same has happened to the word "engineer". These are important issues which must be addressed. They have a direct bearing on quality, standards and the pursuit of excellence.
	An observer from the higher education sector who sat in the Gallery during the last debate in December commented that the Minister sounded so sanguine about the concerns expressed during that debate. I agree with that remark. As we all know, students were deceived by the Government over tuition fees in the run-up to the general election. The abolition of maintenance grants, together with the introduction of tuition fees, was compounded by the increasingly bizarre Scottish anomaly and is causing much distress. There have been two reports on this. The first was the Cubie report, referred to by my noble friend Lady Carnegy of Lour. As regards the contribution made by my noble friend, I wonder whether the Minister will be able to tell the House who will be footing the £50 million costs of the Scottish proposals? Or what will not be funded if that expense is to be met from the normal block grant? Secondly, we have seen the Quigley report.
	The fourth-year anomaly has been partially resolved by the Scottish Parliament, although inexplicably the changes for Northern Ireland are not to be introduced until 2002. Why is that? What legislative changes are required to implement those proposals?
	However, the matter goes from bad to worse for English and Welsh students. Tuition fees, as an advanced payment, have now been abolished in Scotland and replaced by a postgraduate contribution. This arrangement is to be extended to Scottish, southern Irish and European Union students, but not to English, Northern Irish or Welsh students, even though they are also full citizens of the European Union. The Minister really cannot defend this situation--well, not with a straight face!
	This issue was discussed while the then Bill was proceeding through this House. At the time I argued that the greatest unfairness was not that of tuition fees, but the removal of the maintenance grant. Students from the lowest income families now leave university with the greatest burden of debt. There is an irony here. On the one hand, the Government are looking for ways to encourage bright young people from lower income families to go to university, while on the other hand they are actively putting obstacles in their way. In addition to the loss of maintenance grant, the Government have abolished the assisted places scheme. They have waged a malicious war of attrition on grammar schools and the Secretary of State has personally pledged, and subsequently legislated, to outlaw selection by academic ability. However, selection for dance, art, drama, sport, music and technology is acceptable. It is a disgrace and a real blow to our brightest children from poorer homes. What is so unacceptable about academic ability for the purposes of selection?
	It is not popular, nor is it in keeping with the courtesies of this House, but it must be said that the degree of hypocrisy shown by the Government is breathtaking when one realises the number of Ministers, including notable Members of this House, who send their children, or indeed went themselves, to the best independent, grammar and grant-maintained schools and Oxbridge colleges and who voted to remove the rungs from the ladder for other bright children.
	On a number of occasions I and others have raised the issue of pay in higher education. The Bett report, published some time ago, has been dismissed as being a matter for the universities themselves. However, without some recognition through funding, they are not in a position to respond.
	Many eminent people, including vice-chancellors, have warned of a crisis in recruiting the brightest and most ambitious postgraduate students back into academic life. The brain drain appears to be with us again and, over time, that will have an impact on standards.
	The Government have exacerbated the situation considerably for higher and further education by providing more funding for teachers in schools. I say "schools" because a further manifestation of the teachers' pay awards is the anomaly created for non-school teachers, for example, in the Prison Service, young offenders' institutions and hospital schools.
	The Bett report made clear that it will be difficult to sustain a world-class higher education system in the United Kingdom. Some spending commitments arising from the comprehensive spending review have already been announced. Therefore, today would be an ideal time for the Minister to make some commitment in response to recommendations in the report.
	The Minister will almost certainly make reference to the record of the previous government, of which I was a member. I shall not argue about there being problems within the sector when we were in government. That is why the Dearing committee was set up with all-party support. Funding and pay were both key issues. It is, however, worth making two more points. First, the Government are now in their fourth year and should be answering for their own record. Secondly, despite cash increases since 1997, the Government are spending only 1.12 per cent of GDP on higher education, compared with 1.23 per cent of GDP in 1979 and 1.19 per cent in 1996-97.
	I am grateful to my noble friend Lord Baker of Dorking. His remarks were radical. I am grateful also to my noble friend Lord Skidelsky. There is much in their call for freeing up the institutions. The noble Baroness the Minister concluded her speech in the previous debate on this matter by saying,
	"I do not recognise the rather gloomy picture painted in speeches made by some Members ... Nor do I believe that many vice-chancellors, university staff and students would recognise it".--[Official Report, 8/12/99; col. 1358.]
	That does a great disservice to many in the higher education sector who are very concerned. I appeal to the Minister to think again about that comment.

Baroness Blackstone: My Lords, I begin by congratulating the noble Baroness, Lady Walmsley, on her excellent maiden speech. The comments that she made about confidence and communication ring a great many bells with me and my right honourable friend the Secretary of State. We want good state schools to ensure that all young people benefit from being helped in that respect.
	I should like also to congratulate my noble friend Lord Bernstein of Craigwell on what was, again, an excellent maiden speech. My noble friend rightly drew attention to the work of our art colleges. These colleges are beacons of success and bring in large numbers of students from around the world. I went to a fashion show arranged by one of them only 10 days ago. Some of it was a bit "whacky", but much was of extraordinarily high quality. It is in such schools that many of our designers are trained. Many are taken up not only in this country but by designer organisations all over the world.
	We should all thank the noble Lord, Lord Baker of Dorking, for initiating the debate. I always enjoy taking part in debates with him, even when his rhetoric gets a little out of hand as I believe it did once or twice today. As Secretary of State for Education in the latter part of the 1980s and early 1990s the noble Lord was responsible for beginning the largest expansion in higher education places since the Robbins report. It is a pity that the policies of his successors resulted in a stop-start approach to expansion, with the imposition of ceilings on student numbers. We also should not forget that under the previous government funding per student was cut by an extraordinary 36 per cent between 1989 and 1997. That really did tarnish the noble Lord's policy of expansion. I must say to the noble Baroness, Lady Blatch, that if there has been a crisis, it has been due to the policies pursued by the noble Lord's successors. In a sense, the noble Baroness admitted that there had been problems.
	I always learn something new from these debates. Tonight, I have learnt that Jim Hacker went to the London School of Economics! I cannot recall exactly whether he was there in my time, or that of the noble Lord, Lord Dahrendorf, or the noble Baroness, Lady Sharp.
	We have had a good debate covering a wide range of issues. Noble Lords will understand that I shall not be able to cover all the points raised. I shall attempt to focus on the main points. I shall write to noble Lords about the more detailed matters raised in the debate.
	I am glad that some of the speeches addressed wider issues of access and funding than the debate that has raged over the past two or three weeks. I am particularly grateful to my noble friend Lord Longford for his unduly flattering remarks about me and also for giving credit to the excellent work of our new universities, the former polytechnics. I endorse everything that my noble friend said on that subject.
	The Government's vision of higher education is clear. We believe that education makes the most significant contribution to improving the lot of our citizens. Through education people acquire knowledge, skills and attributes that they need in order to make a success of their lives. They can earn more, have more satisfying jobs and gain greater benefit even from their leisure. They can engage more easily in the political, social and moral debates that go on every day in their adult lives. That is true of all phases of education, but it is especially true of higher education. Gone are the days when an undergraduate degree was the reward of the privileged few. I congratulate the noble Lord, Lord Baker, on helping to bring that about. Higher education must serve the nation as a whole, either directly through educating increasing numbers to degree level, or indirectly through providing the skilled people on which the growing knowledge economy depends. I make no apology for using the term "knowledge economy". That is why the Prime Minister has set ambitious targets to expand higher education yet further so that half our young people will have benefited from higher education by the time they reach the age of 30.
	Higher education must be open to all who can benefit from it, irrespective of social class, race, income or the type of school that they attended. Widening participation and opening access mean just that: making sure that no one is prevented from attending university who can benefit from it. That means working on the attainment of all up to age 18. It means making sure that prospective students apply for places and that the admissions arrangements are blind to all factors other than the achievements and potential of prospective students. That must be the basis on which students are admitted.
	Many thought that mandatory grants were the key to helping more students from poorer families into higher education; indeed, I believed that myself. The facts are otherwise. The share of places taken up by students from manual backgrounds has remained low. As mandatory grants began to be phased out after 1990, the proportion of students in higher education from the lower socio-economic groups rose from one in 10 to one in six as now. That proportion is still far too low.
	That expansion has to be paid for. When higher education was enjoyed by only a few, the taxpayer met the whole bill. Few at the time said that that was unfair but graduates, who have prospects of high earnings, were being subsidised by the general taxpayer, many of whom had not themselves had the benefit of higher education. Perhaps I may say to the noble Baronesses, Lady Sharp and Lady Blatch, and the noble Earl, Lord Russell, that we have reformed the student support system to provide more and better targeted support to those low income students who need it most. The basic system, I believe, is now fairer to students, their families and the taxpayer. We have provided low-cost loans for maintenance which graduates repay through a new income-contingent scheme which links repayments directly to income. We ask students and their families to make a contribution towards their tuition fees if they can afford it. The fee is about one quarter of the full cost. The contribution is means tested. Those students who come from less well-off families do not pay tuition fees. That applies to one third of dependent students now and that figure will rise to about 40 per cent from next year.
	For the first time part-time students, who make up 30 per cent--a growing share--of all students, are now eligible for hardship funds. Those on benefits or low income get their tuition fees paid. This year those on low incomes will also be eligible for income-contingent loans of £500 a year.
	The noble Lord, Lord Baker, said that I had once accused him of being a mean-spirited Thatcherite. I do not remember making such an accusation. I remember the noble Lord coming to Birkbeck. There was an excellent discussion over dinner during which he made a splendid speech about the role of Birkbeck. Perhaps I may say to him that my old colleagues at Birkbeck are absolutely delighted that this Government have at last done something for part-time students. I had asked him to do that; regrettably, he was unable to do so.
	There is no evidence to suggest that our arrangements have deterred students from entering higher education, as some noble Lords on the Benches opposite claim. On the contrary, student numbers have increased over the past few years.
	To widen access to students from disadvantaged backgrounds we are working with Peter Lampl and the Sutton Trust to expand and develop summer schools for 16 to 18 year-olds in FE and secondary schools. We are introducing opportunity bursaries of up to £1,000. We are also raising the income threshold for the parental contribution from next year which means that a further 50,000 families will not have to meet the costs of tuition fees.
	Access and hardship funds are now at around £75 million, not the £45 million quoted by the noble Lord, Lord Baker. They will total £87 million next year which is four times the figure in 1997.
	The student support reforms target the maximum support on students from low income families where it is most needed. The noble Lord, Lord Butler of Brockwell, tells me that he wants to pay higher bursaries to low income students to induce them to apply to his college. I fully support such measures, as I support any moves which will improve the chances of the most able state school pupils being able to enter our leading universities. I have already told the noble Lord I would ensure that these new measures did not result in students from low income families paying fees. I was, therefore, a little surprised that he chose to write today an article in the Independent without making that absolutely clear. However, I am grateful to the noble Lord for raising the issue. Where students are in receipt of substantial income their access to government support must be limited. That is a principle long established under successive governments and there is nothing new about it.
	I turn to the issue of higher education funding which was raised by a number of speakers. We now spend over £10 billion in the UK on higher education. In 2001-2 higher education will receive an extra £295 million compared with the previous year. That is a cash increase of 5.4 per cent which is on top of an extra £253 million for 2000-1 and £318 million extra the year before that. Of the extra £295 million, over 80 per cent will come from new funding rather than fees. That means that since April 1998 planned funding for universities has increased by just over £1 billion in new money, which is an increase in real terms of 11 per cent.
	I am not inclined to take any lessons from the Conservatives about higher education funding. Moreover, during the period that the noble Lord, Lord Baker, was Secretary of State the percentage of GDP going into higher education was less than it is today. The Government have called a halt to the huge 36 per cent cut in funding per student which was experienced under the previous government. We have implemented the findings of the Dearing report and have held the efficiency savings required of the higher education sector at 1 per cent. I can reassure my noble friends Lord Hunt and Lady Lockwood that the spending review continues and no decisions have been announced. Reports about efficiency savings of up to 3 per cent are speculation by some newspapers. I can also give my noble friend and others who have taken part in the debate a pledge that I shall fight hard to ensure that the compact that the Government made following the Dearing report is adhered to.

Earl Russell: My Lords, does the Minister understand, first, that the message about funding is not coming simply from the Conservative Party; and, secondly, that if the noble Baroness does not heed it a large number of universities will go down the path indicated by the noble Lord, Lord Skidelsky? I do not think that she wants that any more than I do.

Baroness Blackstone: My Lords, of course I do not want that. I do not believe that universities will go down the path that the noble Lord, Lord Skidelsky, wishes them to take. Our universities wish to remain autonomous institutions but with public funding. That is the position of the Government.
	The noble Baronesses, Lady James and Lady Blatch, mentioned college fees. Perhaps I may reiterate what has been said on a number of previous occasions. The Dearing committee recommended that the direct payment of Oxbridge college fees by DfEE, which amounted to a 40 per cent premium above that provided for teaching in other universities, including other top universities, should be reconsidered. It was considered by HEFCE which recommended that it should be replaced by a different system that more closely reflected the funding of the remainder of the sector. The change is being phased in over 10 years. The reduction will involve no more than 0.2 per cent of the total income of those universities. It is important not to exaggerate the impact of those changes.
	I am grateful for the comments of the noble Lord, Lord Trefgarne, about foundation degrees. I was extremely surprised by the comments of the noble Baroness, Lady Perry. Those degrees will accomplish the very thing she wants: they will promote diversity in the sector, play a vital role in developing our workforce and address the skills deficit at the intermediate skills level. It is through these degrees that the Government see the great majority of the further expansion taking place. We will publish a prospectus soon and I shall ensure that the noble Lord, Lord Trefgarne, receives a copy.
	A number of speakers commented on intrusive bureaucracy in the way in which our universities are treated and claimed that that was the responsibility of the Government. The Government consider it important that higher education continues to be of the highest possible quality, and I am sure that all noble Lords want to see that, too. However, the arrangements by which teaching quality is checked are not in the hands of the Government but the sector itself. I must make clear that the Quality Assurance Agency is not a government quango but is owned and managed by the sector. Following extensive consultation, the QAA will shortly introduce a new system for assessing quality which is designed to reduce bureaucracy and minimise burdens which the previous system placed on universities. I am extremely sympathetic to the complaints that many universities have made about that and shall watch closely to see how the new system beds down.
	Few speakers said a great deal about research, but I believe that it is an aspect that we should celebrate. University research is a key part of the mission of higher education and is one where we have a reputation for excellence. The noble Baroness, Lady Sharp, referred to Sir Robert May, Chief Scientific Adviser, who often quotes figures. With 1 per cent of the world's population, the UK carried out 5.5 per cent of the world's research effort and produced 8 per cent of the world's scientific papers, placing us second only to the USA. Our success in this area, low wastage rates and high quality teaching attract many overseas students, especially postgraduates, from around the world, as the noble Lord, Lord Oxburgh (who is not in his place), pointed out. In order to sustain world-class university research in an increasingly competitive environment we need to ensure that funding exists and excellence is sustained. That is why the research assessment exercise, which allows research funding to be collective, is so important.
	World-class research also depends on world-class facilities and equipment. For that reason, the Government in the previous Comprehensive Spending Review provided, with the Wellcome Trust, an extra £750 million of capital investment over three years through the Joint Infrastructure Fund. That was part of a £1.4 billion package of extra funds for the research base. With these extra resources we are reversing the years of neglect and improving the whole spectrum of research equipment and facilities. I am grateful to my noble friend Lord Morris of Castle Morris for pointing that out. I emphasise that that capital funding is in addition to the block grants which universities receive to fund their research staff and facilities--in England alone that amounts to £867 million this year--and the large amounts of public money which universities receive from the research councils and government departments. Following what was said by my noble friend Lord Desai, I say to noble Lords opposite who want to privatise universities that such a move would cut them off from all that funding. Is that really what they want to do?

Earl Russell: My Lords, does the noble Baroness understand that no one wants to do that, but to continue as we are is not an option?

Baroness Blackstone: My Lords, I thought that some of the noble Lords opposite did want to do it. I thought that they wanted to free universities from what they saw as a constraint in being publicly accountable for the money that they spend. Perhaps the noble Lord can be brief because we are short of time.

Lord Skidelsky: My Lords, I shall be brief. No one on this side of the House advocated privatising the universities. At most they called for a new compact between the universities and the Government so that the Government would provide adequate funding for the universities to fulfil their proper role.

Baroness Blackstone: My Lords, that was not how the noble Lord's speech came across. I shall read it in Hansard, but I do not believe that he made himself as clear as he might have done. The Government already have just such a compact with the universities and are providing extra funding. I recognise that the universities may want more, and we shall fight for further improvements in the Comprehensive Spending Review.
	A number of noble Lords commented on the pay of higher education staff. Our world-class reputation in higher education has been achieved by the quality and dedication of the staff who work in it. They have all contributed to the maintenance of our enviable position. I find it incredible that members of the party opposite are so self-righteous about the issue. During their time in office pay year on year did not increase even to the level of inflation, let alone above it.
	The noble Baroness, Lady Blatch, and the noble Lord, Lord Baker, spoke about the brain-drain. There has always been some academic recruitment across national boundaries, but I am aware that there are concerns about that. It is being monitored by, for example, the Office of Science and Technology. It has found that there is an inflow of academics to the UK at all levels, including professorial. As I told the House previously, higher education pay is under consideration in the current spending round. I am pleased that the employers, the universities, who negotiate pay have been able to make an above inflation offer this year.
	I conclude on the subject of admissions to our universities which was raised by many noble Lords. They spoke about the efforts which top universities, including Oxford, make to broaden the social mix of their students. The Government applaud these efforts. Equally, we must acknowledge, as has the Vice Chancellor of Oxford, that more needs to be done.
	I listened carefully to the wise words of my noble friend Lord Plant. It is regrettable that the latest figures show that 65 per cent of young people who gain three A grades at A-level are state-educated, but only 52 per cent of entrants to Oxford come from state schools and colleges. Research carried out by the eminent Professor Halsey at Oxford shows that it is not just a matter of applications; more students with three As from state schools who apply are turned down than students with three As from independent schools. The North report also recognised that, stating:
	"Fairness to applicants and fulfilment of the university's mission alike suggest that the proportion of applicants accepted should be closer to the ratio of higher grades at A-level, one-third independent school pupils to two-thirds maintained".
	Therefore, the Government and the University of Oxford, as I am sure the noble Lord, Lord Jenkins, will agree, are thinking on exactly the same lines. We want to work not only with Oxford but with all the other universities to ensure that students are admitted on the basis of merit.
	What is required is a comprehensive attack on under-achievement in our schools so that more young people gain the grades which they need to enter higher education. We need an attack on the relatively low number of suitably qualified young people from disadvantaged backgrounds who apply and on admissions systems which sometimes result in certain categories of applicants doing better than others.
	The Government are taking action on a number of fronts, some of which I have indicated. There is much more that I could say--for example, about educational maintenance allowances which are being piloted for 16 to 19 year-olds--but my time is running out. I know that the universities are taking their responsibilities seriously in that respect.
	The last time that we debated higher education the noble Baroness, Lady Blatch, accused me of being concerned about the gloom and doom that emerged in that debate. I am concerned about it because I believe that we have a great deal to celebrate. I believe that our universities and higher education colleges compare very favourably with the rest of the world in terms of the proportion of young people who go to university, the proportion who manage to gain degrees, the employment of graduates and cost-efficiency. I look at the volume and impact of academic research. We punch above our weight. However, that does not mean that we can be complacent, especially in a world of increasing globalisation and competitiveness. Quality must be maintained and completion rates must not be allowed to decline. Above all, as many noble Lords have said, we must ensure that more students from a wider range of backgrounds benefit from higher education. It is to those ends that our policies are directed.

Lord Baker of Dorking: My Lords, I congratulate the noble Lord, Lord Bernstein, on his maiden speech. He brought his knowledge of the arts and media and reminded us of the importance of colleges of art. I also congratulate the noble Baroness, Lady Walmsley, on her witty speech and on the demonstration that she is confident and communicates well. I am sure that we shall hear much more from both of them.
	This has been an interesting debate, and I thank all noble Lords who have taken part. It is an impressive list: four chancellors from Bradford, Leeds, Oxford and Nottingham Universities; two heads of colleges; five former heads of colleges; two former vice-chancellors; and any number of professors. In fact, there were so many professors that at one stage I was reminded of what Lord Keynes said when he was called to be a professor. He said, "I don't want the insult without the emolument". The emolument is what the debate is largely about.
	I remind the Government that they have received many warnings tonight. The noble Lord, Lord Dearing, spoke of worn-down research infrastructure; the noble Lord, Lord Bragg, and my noble friend Lady James of disgraceful salaries; the noble Lord, Lord Dahrendorf, of signs of strain; and the noble Lord, Lord Weidenfeld, said that Gordon Brown had received a good sand-bagging in this debate and had damaged the reputation of universities in Europe as a result of his action. The Minister should listen to those comments. She should listen to what my noble friends Lord Norton, Lord Renfrew and Lord Hunt, say about the burden of bureaucracy. Those are warnings to her.
	I believe that she is in great personal difficulty as a Minister with responsibility for higher education. The funding gap is absolutely enormous. The salaries of academics should rise by between 30 per cent and 40 per cent. There is little point in arguing who is to blame for this situation. We, as Tories, take some of the blame, but the Minister must still achieve an additional £800 million a year in order to return to the level of average funding that obtained in our 18 years of government.
	The gap is huge. How will she bridge that gap? How many years will it be before academics catch up? We are not talking about hundreds of millions of pounds; we are talking about billions of pounds. When it comes to the funding gap for research, one should read the speech of the noble Lord, Lord Oxburgh. He is the head of our greatest research college; he is at the pinnacle. He said that he is ashamed to invite his peers from around the world to his university. He is ashamed because of his research infrastructure.
	This is the knowledge economy for which the Minister is responsible. How much will she obtain from the Chancellor? She needs not hundreds of millions; she needs billions of pounds. I do not believe that she has the fire power to take on a disgruntled Chancellor. Therefore, I feel sorry for her because the gap is enormous. As the noble Earl, Lord Russell, said, we cannot go on as we are. Noble Lords have complained of bureaucracy. Bureaucracy becomes so over-burdened because it is determined by state money. My poor noble friend Lord Renfrew must record on a form the percentage of his time that he spends thinking. And so on and so on.
	Nothing will be achieved until the universities again become independent and truly autonomous. That will happen, and the Minister should try to devise schemes to move matters along more easily; otherwise, she will come to the House with a very disappointing settlement. She has heard the demands from her own side. Incidentally, only one noble Lord defended Gordon Brown. He should be promoted! The Minister has heard the demands. How will she meet them? The gap is absolutely enormous and thus the slow, slow decline continues. And it is a decline. I urge noble Lords to read again the speeches made today in order to understand the real problem.
	I began by saying that there is a crisis. It is a crisis. I said that the universities are a nationalised industry. They have all the weaknesses of a nationalised industry. That is what has been rehearsed in this House today. I hope that the Government will listen. My Lords, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.

Horserace Totalisator Board Bill [H.L.]

Viscount Astor: My Lords, I beg to move that this Bill be now read a second time. The debate will perhaps take place in front of a smaller audience but, I hope, one of just as high quality as that of the numerous academics who seem to be fleeing from the Chamber. I shall let them go, no doubt marking themselves with points out of 10, before I start to consider the Bill.
	Perhaps I should begin by saying what the Bill is not about. It is not about who owns the Tote. As your Lordships will remember, the Government's answer to that question from my noble friend Lord Burnham last year was:
	"The Horserace Totalisator Board is a non-departmental public body whose members are appointed by the Home Secretary. Technically, it is these appointed [board] members who are responsible for the assets [owned by] the Tote but they do not actually own the assets".--[Official Report, 10/6/99; cols 1541-42.]
	I am delighted to see that one of the members of the board, the noble Lord, Lord Lipsey, is here tonight. Indeed, if anyone owns the Tote at this very moment, it is perhaps the noble Lord. I look forward to his contribution.
	In answering at that time, the Minister, the noble and learned Lord, Lord Williams of Mostyn, went on to say that primary legislation would be required in order to change the status of the Tote and bring it fully into public ownership before any other changes could be made. Your Lordships will remember that the Tote was created by a private Bill that became the Racecourse Betting Act 1928, which amended the 1853 betting Act.
	Prior to the question from my noble friend Lord Burnham, the Home Secretary had appointed a steering group to advise him on the Tote. The Minister at the time promoted a report produced by the steering group to justify the claim that the Treasury should benefit from the sale of the Tote. It is hardly surprising that the steering group came to that conclusion because, of its seven members, five were the Home Secretary's own officials from the Home Office and, indeed, one was from the Treasury.
	However, events have moved on. Progress was made when on 2nd March this year the Home Secretary announced that the Tote would be sold to a racing trust. That announcement was widely welcomed within racing and I applaud the Home Secretary's decision. There had been quite an argy-bargy within racing as to whom the Tote should go. Finally, the chairman of the British Horseracing Board, Peter Savill, Sir Eric Parker, chairman of the Race Horse Owners' Association, and Peter Jones, chairman of the Tote, were able to come to an agreement about the composition of the racing trust.
	In spite of the Home Secretary's decision, I do not entirely accept the logic that the Government own the Tote or are entitled to all the proceeds. However, in the light of the Home Secretary's decision that he intends to sell the Tote to racing for the benefit of racing, I accept that his decision is in the long-term best interests of racing, provided it is sold or transferred to the racing trust at a reasonable price. As always, the devil is in the detail.
	The Government rightly say that transferring the Tote to racing requires primary legislation, first, to clear up the ownership issue and, secondly, to allow the Government to sell or transfer the Tote to a private body. The Government have promised a Bill, but they cannot say when. We know that there is a log-jam of Home Office Bills this Session. Some will have to fall as there are perhaps too many for the timetable. As for next Session, who knows? If there is an election next May, there will be more important Bills on the agenda in the short space of time that may be available, including perhaps at least one from this Session.
	Even if the general election is put off for a year, will the Home Office obtain a slot in the busy parliamentary timetable for a racing Bill? As we know, home affairs always take more Bills than any other government departmental interest. There is always a criminal justice Bill in every Session and, as I said, probably in the next Session Bills will be added from this Session. As has happened in the past, there will always be a danger that racing's interest will be bumped to the bottom of the list and, finally, off the list.
	Therefore, I come here this evening to try to help the Government by bringing forward a simple Bill to do the job. I believe that a private Bill such as this, even if it is not the Bill that is finally used, can be used to transfer the Tote to racing. It will, I hope, receive support on all sides of the House. The Bill could even make progress in another place should the Government care to pick it up.
	I accept that the Government are genuine in their view that they want to transfer the Tote to racing, but two issues concern me. That is why I have brought the Bill forward today. My first concern relates to the Levy Board and its future. The Home Office Minister in another place has suggested that the Government, in reviewing the future of the Levy Board, should consider that review at the same time that any proposals for the Tote are considered. I understand that the Government have decided that the Levy Board should be abolished. Can the Minister confirm that today?
	I also understand that the BHB, at the Government's request, is in the process of preparing a plan for the future funding of racing. There seems to be agreement that the Levy Board's central funding role should be transferred to another body, but no agreement yet as to whether that body should be the BHB or some other new entity. However, it is important that the levy is directly transferred for the benefit of racing.
	The Levy Board and the Tote are separate issues and should not be linked or confused. To put them together could put back further any timetable for privatising the Tote. There are, of course, obvious links between the two bodies at board level but their functions are totally different. The Levy Board is a statutory body under the Betting, Gaming and Lotteries Act 1963. It is charged with the duty of assessing and collecting monetary contributions from bookmakers and the Tote, and then with applying those contributions.
	In regard to those contributions, the Government's own paper states:
	"Applying them for the purposes conducive to one or more of: the improvement of breeds of horses; the advancement or encouragement of veterinary science or veterinary education; and the improvement of racing".
	The Levy Board does a good job.
	In the past, options for the Levy Board have included abolition, privatisation, contracting out some of its functions, or merger. However, I should point out that the Levy Board could also be dealt with by a private Bill--even an entirely separate Bill from the one relating to the Tote.
	My second concern and reason for bringing the Bill forward is that the Government have announced a betting and gambling review. I welcome the fact that a review will take place, as do the racing industry and, by and large, the betting industry. However, the bookmakers' lobby is extremely worried. In particular, bookmakers with shops seem to view any possible extension of betting as damaging to their interests; they are obviously concerned that if betting moves out of shops it will devalue them. But we heard those kinds of claims, for example, when the National Lottery was introduced. It is right that the pools industry suffered. However, it found its feet again and found a market. Although its turnover went down by a considerable amount, its profits went down by a much lesser amount. Let us not forget that racing is only a part of the betting business. Other sports such as football and cricket attract significant turnover.
	Any extension of betting could be very beneficial to racing. A successful betting industry is crucial to racing--it pays, for example, more than £60 million to the Levy Board, while the Tote at the moment pays less than 10 per cent of that figure to the Levy Board, just over £5 million, although that is only part of the Tote contribution to racing, which includes prize money and other support.
	The interests of racing and bookmakers are not always mutual and occasionally conflict. The betting industry is concerned about the transfer of the Tote; the Tote is competition and may become a more effective competitor in the future. The bookmakers have lobbied the Government and have claimed, rather interestingly, that the price the Treasury will receive on the transfer of the Tote to a racing trust will be five times less than its real or market value. I do not know how they manage to substantiate those claims, but they have been made. It is certainly a claim that alarms those of us who support the Tote and no doubt it is being studied carefully by the Treasury.
	The price is important. If the Tote is to achieve a real return for racing, it cannot be saddled with too high borrowings. Even at a modest sum, the Tote may need outside capital if it is to expand and improve its product to help fill the funding gap that currently exists in the racing industry. The Tote may well need partners.
	The betting industry does and must stick up for its corner; there are sound commercial reasons for it to do so. Its primary duty is to its shareholders--but let us all recognise where it is coming from.
	The Tote need not be direct competition. If it sold its rather small chain of betting shops and concentrated on Tote Direct, Tote Credit and its on-course facilities, that would be an improvement and fit in much better with the industry. Equally, all of the betting industry should sign up to Tote Direct and share in the benefits of the monopoly pool. For example, Tote pool betting is not currently available on on-line betting sites; nor, therefore, is it available to an international audience.
	The worry that I have had all along is that the Home Office, like all good government departments, will encourage its Ministers to think of tidy solutions. One can see the advice: why use up good parliamentary time to transfer the Tote when legislation may be needed for the abolition of the Levy Board, possibly for new rules for casinos, and for the changes that will be needed following the gambling review. One can imagine the sound, sensible advice. But any delay will damage racing. The bookmakers are all rushing off to establish new off-shore operations; the Tote is not able to do that at the moment.
	My Bill offers a way out of the dilemma. I should like the Minister to confirm today that the issues of the future of the Tote, the Levy Board and the gambling review need not be so closely linked. Racing cannot afford to wait. If they are linked, the Government should explain why.
	I do not intend to go into the detail of my Bill, except to say that I hope that it is simple and workable. Clause 1 allows the Secretary of State to bring the Tote fully into public ownership, and Schedule 1 makes provision for the transfer scheme to achieve this. Clause 2 then allows the Secretary of State to privatise the Tote and gives him power to dissolve it. Clause 4 makes provision for the pension rights of people working for the Tote, which is important and is required to avoid the issue of hybridity.
	If the Bill needs amending, we could, of course, have a Committee stage, a Report stage and a Third Reading. However, unlike most government Bills that have been brought forward recently, I am rather proud to say--I have to thank the draftsman who helped me--that this Bill has received a clear judgment from the Delegated Powers and Deregulation Committee that no amendment is needed to the delegated powers in the Bill, nor to the parliamentary control provided for those powers. I again thank the Private Bill Office for its help in drafting the Bill.
	Racing needs the Tote and needs it soon. It is constrained in its present form. It is almost 10 years since the Home Affairs Select Committee recommended that the Tote should pass to the racing industry. Racing cannot wait another 10 years. My Bill allows it to happen in this Session--it could happen by November. With government support, we could have the Horserace Totalisator Board Act. I commend the Bill to the House.
	Moved, That the Bill be now read a second time.-- (Viscount Astor.)

Lord Lipsey: My Lords, as the noble Viscount, Lord Astor, said, I am a member of the board of the Tote. I declare that interest straightaway. It is a sad commentary on the social decline of the Tote when compared with the great days of the late Lord Wyatt, that the only Lord on the board should be on this side of the House. I think that would have amused Woodrow quite a lot.
	The whole House will appreciate the initiative of the noble Viscount in bringing forward this Bill. It has won the support of all three parties in this House, if not en masse. The interest that the noble Viscount has always taken in the Tote is most welcome, as is the stress he laid on the urgency of the legislation.
	The outside critic may ask what is the rush; why the hurry? The Tote is doing well; profits last year before contribution to racing and exceptional items were £21 million, which compares with only £10 million five years ago. I honestly believe that the Tote has become a sharper operator; for example, it has a new joint partnership on the Internet, Totalbet, and its highly successful new bets, the Scoop 6 and the Exacta. We were able to bid for Corals when it came on the market last year, although sadly we were not successful. Our credit operation has a reputation with its customers that is second to none, and the Tote will now lay "thick" bets in a way that certainly was not the case a few years ago.
	But these successes have been achieved despite being in the public sector and not because of it. The Tote has paid a high price for its public sector status, and the statutory and non-statutory inhibitions on what it does that go with that status. In 1961, when betting shops were introduced, we paid that high price as the Tote was not allowed to compete because, under the legislation, it could not accept fixed odds bets. If that had not happened, today we might be a winner on the high street, not an also-ran. When numbers betting came in with the introduction of the National Lottery, the Tote was denied entry for 12 months because, under the legislation, it could take bets only on sporting events.
	Today, we face a similar problem in the form of competition on the Internet. I shall illustrate that with some real figures. Over the past three years, Tote Credit, the telephone arm of the Tote, has been growing by 25 per cent a year, but with tax-free offshore betting available, some of our best clients have left us. Over the past six months business has declined by 3 per cent, and we are not necessarily at the end of the road yet. As a public sector body it is not easy for the board, with the best will in the world, to move as swiftly and as decisively into some parts of this market as can bookmakers.
	The Home Office, Ministers and officials--I pay tribute to them--are alert to these problems. They are as helpful as they can be. But by their very nature, public bureaucracies can move only so fast, and so fast is not always as fast as commercial imperatives require. The Home Office has more important fish to fry, as the noble Viscount, Lord Astor, made clear in his speech. A change of ownership would benefit the Home Office just as it would benefit the Tote.
	With regard to the form that change should take, first, it seems to me clear that racing should have a major stake in the new Tote. Not only does racing have, as the noble Viscount, Lord Astor, pointed out, a claim on the proceeds of the Tote, but it is also clear that there are major synergies between the aims of racing and the Tote, which will mean that if they work in partnership they flourish best. That is an argument against flogging us off to the private sector.
	Secondly, we now have a concrete form for this: the so-called racing trust. It will have a punter's representative and I see a natural candidate sitting below the Bar of the House who would be right for that post. As the noble Viscount hinted in his speech, we did not have an entirely clear run in bringing that proposal forward, but in the end it burst through decisively and the judge, the Home Secretary, declared it the winner in his parliamentary Answer in another place on 2nd March. The trust, or company limited by guarantee, as it is more likely to be, should be an effective vehicle to maximise the future profitability of the Tote for the benefit of racing, combining as it does the ownership pressures of the racing industry with an operational board structure that will encourage continued enterprise in a fast-changing, betting marketplace. Personally I believe that provided it is chaired, as I am sure that it should be, by an independent person of high standing, that will work to the benefit of everyone.
	Incidentally--the noble Viscount referred to this matter--I do not believe that the bookmakers are right to be scared of this prospect. I know that there have been worries that the trust may be the poodle of the BHB, but the BHB will not be in a majority on the trust and the chairman will be independent. The Tote does not seek special favours; it seeks lively and fair competition.
	Finally, perhaps at the risk of importing a certain controversy to the matter of price, I do not disagree with the noble Viscount, Lord Astor, when he said that the Government have no particular claim to the proceeds; that is, apart from any of the proceeds which may be attributable of the exclusive right to run the on-course pool. However, a certain realism is needed. I speak as someone who, if I understood the noble Viscount aright, is one of the current owners of this excellent company.
	There are two facts. First, the Home Secretary can appoint as many directors of the Tote as he chooses, so if he believes that we are running off with the loot, or disposing of it in some way that he does not like, effectively he can overrule us by appointing others who will not do that. Secondly, the price should not be so low that a plausible case can be made to Brussels that it should be declared an unacceptable "state aid" to the business. Those two facts alone mean that negotiation is inevitable; negotiation which I am sure will come up with a fair price that also reflects the relatively small part that successive governments have played in the Tote. An amazing amount of Ministers' time was taken up over the late Lord Woodrow Wyatt's reappointment. His glorious reign was extended by successive Home Secretaries until so late in his life.
	I should be surprised if the Minister, in his reply, does not refer to some of the ways in which this Bill is imperfect. It does not lay down a new structure for the Tote; it does not deal with the regulation of the pool monopoly, which clearly is necessary; and there are other gaps. However, in no way does that detract from the value of what the noble Viscount has done in bringing forward this Bill. This should be seen as a wake-up call to the Government. The Tote cannot wait for levy board abolition, casino law changes, or for gambling reviews. It needs its freedom now. That way consumers will benefit from sharper competition; racing will benefit from its increased profits; and the country will benefit from a flourishing horseracing industry.

Lord Burnham: My Lords, I am advised that I too should declare an interest. While there is no family that engages less in pillow talk that mine, my wife is a director of the British Horseracing Board and, as such, I may be considered to have an interest.
	In June last year, I asked the Government, as my noble friend has said, a simple four-word question, "Who owns the Tote?" I did not receive, and indeed I did not expect to receive, a simple four-word answer. The then Minister, the noble and learned Lord, the Attorney-General, was at his obfuscating and courteous best. I hope that the Minister will find it possible to be a little more helpful today.
	In July, in a later debate, the Minister told your Lordships that the directors of the Tote did not, as I suggested, own it. He said that they were able to direct the assets and the conduct of the business but they were not the owners. More helpfully, he added that there was no reason why legislation should not be introduced to enable it to be sold. That is why we are here today.
	I still do not accept that the Government have any right to make money out of the Tote. Nor do I accept the validity of the report of the steering group on which, as my noble friend said, only the chairman of the Tote, Peter Jones, was put in to balance one Treasury representative and four Home Office representatives. The Government have put nothing in so why should they get anything out?
	If the Tote is anything, it is an institution, like Stonehenge. In France Pari Mutuel has a monopoly of gambling on horses and it is there that the elder Louis Romanet, its former head, said that an attack on the PMU was like an attack on the French Government. The Tote does not hold quite that position in British life, but it is nevertheless a major part of it, and, like much of British life, it comes of origins shrouded in the mists of time.
	The noble and learned Lord, Lord Williams, asked my noble friend in July of last year whether it was official Opposition policy that the Tote should be disposed of with no benefit to the taxpayer. This was a good catch-22 situation, but it does beg the question whether the Government have the right to sell something for the benefit of the taxpayer that it does not own. If the noble and learned Lord were here today I should ask him that question back.
	Having made the remark, the noble and learned Lord-- ignoring the jibe he had just made--said that it would be foolish to treat the Tote as a political football, and complimented my noble friend Lord Astor and myself for not so doing. It is with that in mind that we--and I certainly speak for myself, if not necessarily for my noble friend--have abandoned our sincerely held beliefs that the Government have no right to any money from the Tote. Therefore, we are supporting the Bill tonight, a Bill which assumes such a right.
	It is noticeable how the small number of speakers in this debate are distributed equally among the political parties. We all, I believe, have one thing in mind, which is to help the Tote to get into a position where it can do the maximum good for racing. That, I think we all believe, is to get the Tote into the incontrovertible ownership of a trust representing racing. It would not, surely, be desirable to have it owned by a plc which has to pay out, not racing interests, but shareholders.
	That being the case, I hope that the Government will realise that the Bill is intended to help to achieve the aim of selling the Tote for the benefit of all. No doubt your Lordships will give it a Second Reading tonight, but since it will probably be quite simple to run it through the remaining stages in this House, I hope that the Government will act to get it through in another place. The noble Lord, Lord Lipsey, commented on the imperfections of the Bill. I am sure that it has imperfections. But of course it has the very simple aim of enabling us to start to get the Tote into the correct hands. When we have achieved the passage of the Bill, as I hope we shall, we shall be able to get down to more important matters like working out the price that the racing trust will have to pay.
	In common with other noble Lords, I have heard sums of money quoted, both what the Tote has offered and what the Government are believed to want. I do not intend to quote either, although I may say that within the past three-quarters of an hour one of my noble friends in the Bishops' Bar offered to buy the Tote on the spot at the higher rate which I heard quoted as the figure the Government are looking for. I hope I dissuaded him.
	Undoubtedly, if the price settled is too low, the bookmakers will complain about state aid. So it has to be a fair figure, which will enable us all to be happy at the end. I remind the Minister, however, that we have here an industry which is in desperate need of money. If the Treasury is too grasping it will be in no one's interest. The Government's take from betting tax is dropping due to the growth in offshore, non-tax paying bets. The Tote itself is seeing a fall in its turnover. Its credit business is being beaten up by offshore betting. Unless the Government do something about betting tax--of course this is a totally separate subject--there will be a serious fall in revenue. The Tote itself may well find that it is necessary to go off into warmer waters. It may well there place itself outside the range of the most grasping taxman. It is only necessary to look west to Ireland to discover how the problem can be solved. But, as I have said, that again is another matter.
	Meanwhile, will the Minister assure the House that the Government will give the Bill a fair wind and assist it through all its stages in this House and in another place? It is in everybody's interests that that should happen.

Viscount Falkland: My Lords, I have no interest to declare, except that I have been contributing to bookmakers' satchels now for more than 50 years, and sometimes indeed to the Tote. I should also like to say that although it was published in Racing Post today that I am the sponsor of the Bill, I am in no way a formal or informal sponsor of this Bill. That does not mean that I am against the Private Member's Bill. Indeed, I congratulate the noble Viscount, Lord Astor, on bringing it to this House so that we can discuss the interesting issues which have already been rehearsed. It is, of course, a probing Bill. It is a Bill that seeks to elicit from the Government some more information following their indication that they are intending to pass the Tote into other hands. I shall be as interested as all other noble Lords to hear what the Minister has to say about that.
	At the outset one needs to say something about racing as a whole before one speaks about the Tote. Over many, many years--decades and longer--racing in this country has been, and is, a model for the rest of the world. It is known throughout the world for its variety, for the enthusiasm of those who follow it and for the dedication of those who work in it. That is real dedication because many of those who work at the lowest levels in racing--those, male and female, who look after horses--are extremely badly remunerated for the work that they do. The central problem about our racing has been the continuous lack of adequate and predictable funding. In fact, the engine for funding in racing is, of course, betting, and in this country that engine has developed in a way peculiar to the United Kingdom.
	I say at the outset--I shall elaborate on this point in a moment--that the one outstanding asset that British racing has, despite various hiccups, and hiccups in recent times, is its integrity. The integrity of British racing is important because we are dealing with very large sums of money, and we are dealing with a very wide sector of the British public. That integrity has been safeguarded over the years by successive governments, by the Jockey Club and by other bodies. But it is not good enough that that integrity exists; it has to be seen to exist. It has to be perceived. The perception of what goes on is so important. The perception of the integrity of racing, thankfully, both here and abroad, has been maintained at a very high level, and those bodies which I have mentioned, which include the Home Office, must over many years take a good deal of credit for that.
	I know that people talk loosely about how we must get rid of all regulation and why should not people be allowed to do what they want. I do not know whether I am the oldest person here, but I do recall--and I have mentioned this before--that when I first started going racing--which was just after the Second World War when there was that rare hiatus in this regulated integrity that we have because of the war--that for a while we had race gangs operating at Brighton, a place well known to the Minister. That was quickly dealt with and we got back on track again. I do not want to hear anyone again saying that if you free up racing and you free up gambling in this country--and the gambling review body will deal with that--it is not going to attract those kind of elements which will bring down that integrity which racing holds in the eyes of the British public and abroad.
	Racing is well served by press and television. Here enthusiasm for racing is enormous. In France, where I go racing fairly regularly, racing is well organised and well run, but no one goes. So far as I can see, one finds there only the international rich and illegal immigrants. Indeed, one day I was talking to a French racing friend of mine--he is a trainer--and I asked, "How do you deal with the heckling that comes from certain sectors of the crowd around the paddock?". They enjoy that at French race meetings. He said, "Thank God for it. I don't care if I'm insulted. It livens things up". In France the scene is steady because of a Tote monopoly and various aspects are better funded. Here, where everyone is keen on racing, we have all kinds of troubles that do not exist anywhere else.
	I turn to the Tote itself. I am surprised that neither the noble Viscount, Lord Astor, or the noble Lord, Lord Lipsey, has sought to define what is the Tote. The Tote is a mixture of pool betting and straightforward bookmaking betting through betting shops and offices. We all know that the Tote arose because of historical circumstances. All credit to the bookmakers. They were given the opportunity to remain operating. The Tote was brought into existence to give the working man, who was not able to bet in large sums or did not want to bet with bookmakers, an alternative way of betting. But the Tote was always going to struggle against the competition from bookmakers.
	For the regular racegoer and the larger punter it has always been an unattractive prospect to bet with the Tote. They prefer to go to bookmakers. The bookmakers say quite rightly that, as it exists at the moment, the Tote does not give choice and does not give value. I think that it gives choice. I am not sure whether bookmakers give value. One can find value if one goes racing every day. Over 50 years I have found it very hard to find value with bookmakers. Recently, curiously, one has been able to find value. The new pitch arrangements and so on have meant enormous competition among bookmakers. In fact, it has probably been the best period for people to back horses in the history of racing in this country. But that has resulted in the major bookmakers seeing a loss in profit on their turnover.

Lord Lipsey: My Lords, I am grateful to the noble Viscount for giving way. I should not like him inadvertently to create a wrong impression, as I am sure he does not mean to. As the figures that are before the board each month show, if you put a pound on every horse on the Tote, you win a good deal more than if you put a pound on every winning horse with bookmakers.

Viscount Falkland: My Lords, be that as it may, the Tote is very patchy. Obviously, those of us who go to Ascot next week will see enormous returns on the Tote pool. The success of a pool depends on the size of the pool. If you have a big pool, you will get big dividends. You have only to go to Hong Kong to see that operate. Here, you do not often get big pools except at the big meetings. I am not criticising the Tote for its operation of the pool. It has done marvellously. The new Scoop 6 pools are very successful. I give credit for that to the late Lord Wyatt of Weeford, with whom I had various tangles across the Floor of the House. Mr Peter Jones has done a terrific job.
	People who read Hansard or find out about this issue from perhaps a radio programme should realise that when we talk of the Tote we are talking about two things which run alongside each other. At the moment, the Tote pool is the poor relation in the operation. My contention is that in the future, because of new technologies, because of global communications and because of interest in pools, the pool need not be the poor relation. All kinds of things may happen over the next few months, rather than years, which could make the Tote operation very interesting. People in other countries may wish to use our pool and our racing. We may get an enormous pool which will be a new engine for funding racing without having to go into this painstaking, boring and painful confrontation every year with the bookmakers via the levy board to get funding for racing.
	It was said in the papers this morning that 50 per cent of the top trainers in the country said that, because of the difficulties of staff, borrowing money, bad debts and so one, they would not recommend anyone to go into their business. Money is the main issue. The Tote can reverse the situation. I see the noble Lord, Lord Lipsey, nodding. Mr Jones and the noble Lord, Lord Lipsey, are taking steps to see that these new developments take place. I hope the Minister will acknowledge that we could now make possibly the biggest jump in terms of creating some affluence in racing so that even the prize money could be increased.
	I shall not mention prize money. I remember very well the last time prize money was mentioned in the House. We had Lord Hartington upstairs representing the Jockey Club and we had his father, the Duke of Devonshire, down below. After everyone had been whinging on about the level of prize money, the Duke of Devonshire, in the fashion of a fine and distinguished Whig Peer, said, "I don't agree with prize money going up". He said, "If I had a yacht, I would not want my sails or my rudder to be subsidised". To an extent I can follow his reasoning. It was an extreme view. But the prize money in racing has already increased quite markedly at the higher levels in the group racing. That is where the group and pattern race structure in this country has helped to channel better funding into the better races. The prize money will take care of itself if we get the basic funding right. All I am saying to the Government is that they must take care to ensure that no stone is unturned in seeing to it that the new technologies are accommodated and new opportunities are not lost.
	I have written in my notes, to which I have not referred very much, "shootings in the foot". Those need to be mentioned. I shall mention briefly the things which make me hot under the collar. There is the cost of getting into racecourses and so on, which is exorbitant. It is a rip- off. There are also the racecourses which deal with people who have their backs to the racing and instead are enjoying champagne with their hosts in the corporate entertainment boxes. Newmarket has reached the extreme of ludicrous behaviour in that area and that will now be reversed.
	There have been two blips with regard to racing. The first was the appalling handling of the arrest of jockeys and other people connected with racing. It was extremely clumsily done. We have got over that and so I shall not go into it. The second is the integrity of the starting price. That worries the Tote because it deals with this aspect. The starting price is the price at which ordinary punters have their bets settled. Over the years it has been carefully watched and regulated in a way which has been perceived to be fair. What do we have now? We have a most extraordinary situation. We have the new SP Executive. Who is on the SP Executive? The chairman of the SP Executive is Mr Terry Ellis, a man with whom I do not have the honour of being acquainted. I have no reason to believe that he is not a man of the utmost integrity and extremely useful in racing, but he has been employed by bookmakers in the past. He is also director of operations for Satellite Information Services, which beams out pictures to bookmakers. That operation is 40 per cent owned by bookmakers.
	How is it possible that racing could have allowed this change? Even if it is run perfectly, even if all these people have become saints overnight and are whiter than white and everything is done at arm's length, the perception is that it is a rap. Those who have been to racecourses and betting shops know how quickly racegoers get the idea that they are being gypped or that someone has pulled a horse. That is the situation here. How could the bookmakers have allowed this to happen? It is so damaging.
	I do not expect the Minister to give a detailed answer on this point. I have sprung it on him after he was kind enough to have a word with me before the start of the debate. But this development has caused monstrous damage to the perception of our racing. It is so short term. I imagine that the bookmakers are now seeing, with the changes, that their returns are likely to be diminished and punters are having a good time. Even if they do not fall foul of these temptations, there is a perception that they will and that the SP will be manipulated.
	To me, that goes well beyond the blips that we have had. This is the most dangerous development in racing in recent times. It has to be changed. I hope that punters around the country will clamour for it to be changed, and I hope that I have the support of the Tote in its entirety.
	I shall stop now. This is a fascinating debate. I have always loved talking about racing, whether in betting shops, in your Lordships' House or wherever else. I thank the noble Viscount for the opportunity.

Lord Cope of Berkeley: My Lords, we can all agree with the last remark of the noble Viscount. He clearly enjoys talking about the matter, and so do some of the rest of us.
	My credentials here are not nearly so impressive as those of my noble friends and other noble Lords who have spoken. But I have had some exposure to the issues. I was until recently--I do not think it counts as an interest any more--chairman for some years of the Horse and Pony Taxation Committee, a joint committee of the British Horseracing Board, the British Horse Society and other bodies. I also had responsibility for a while in government for betting tax when we were able to carry through some assistance with VAT.
	I mention that exposure to the issues to give at least some authority to my opinion that my noble friend Lord Astor, supported as he is by Peers of the two largest parties, and to a certain extent by the noble Viscount, Lord Falkland, has brought forward a useful Bill which could speed up substantially the reorganisation of the Tote in the interests of racing.
	It is often frustrating in political life to have sensible reform bogged down by legal and bureaucratic delays over the mechanics. This Private Member's Bill shows the way to unlock those delays in this case and allow the reform to proceed. It clarifies, without prejudging the remaining decisions to be taken. If it helps, I would even be prepared to describe it as modernisation, because the Government seem to like modernisation and to think that if something is modernisation it must appeal, without any other justification for change.
	With respect to the noble Viscount, Lord Falkland, I think that it is more than a probing Bill. It is a practical approach to the situation. I shall not follow the noble Viscount in what he said about the starting price, except to say that I have always understood that it was developed by a well-known firm of bookmakers called "Cope" a century or so ago. It was the trust in that firm--no relation of mine, so far as I am aware--that enabled the SP to develop as it did and become the respected institution, if that is the correct word, that it is.
	I was very interested in the attack by the noble Lord, Lord Lipsey, on the public sector character of the Tote, if that is not to misrepresent him. I would have preferred the phrase "statutory character".
	The question of who owns the Tote is very important and potentially a very expensive legal question. I am no lawyer, but I have been told--and I think it has the ring of truth--that the Tote's assets are held in trust for the punters. That means that ultimately it is held in trust for those who bet with it, between the time they place the bet and the time the race is run. In many cases that is only a few minutes, and it is very rarely more than a day. Therefore, that is not a very satisfactory basis on which to proceed.
	The Home Secretary does not own the assets; he is the trustee for the punters. Given that, it seems to me that the European Union could not in any sense complain about state aid, even if the Government were to give the Tote to the racing trust, or, for that matter, anybody else.
	Punters, including punters with the Tote, are not coterminous with taxpayers. They pay tax--they pay betting tax--but they are not the same. Therefore, the view that the Government should pocket the profit on the sale of the Tote is not obvious.
	At the same time, like my noble friends, I shall not argue with the situation that we are in. It is a practical situation in which one cannot ask those who bet on the Tote to vote if they happen to have a bet open at the time. I certainly do not press that view tonight.
	The Bill makes a useful contribution to unblocking some of the difficulties. It might make a major contribution to avoiding great delay on the subject. I am delighted, therefore, to support it, and I hope that the Government will do so too.

Lord Bassam of Brighton: My Lords, I begin by acknowledging that the Bill is undoubtedly introduced with the very best of intentions. I for one particularly welcome the opportunity it has provided for Members of your Lordships' House to air some of the issues associated with the sale of the Tote.
	I have found the debate hugely entertaining. As ever, for someone like me who is something of a novice--no pun intended--it has been a genuine learning experience. I have enjoyed the contribution of every Member of your Lordships' House who has spoken.
	The debate conjured up images for me. I now see the noble Viscount, Lord Astor, in a trilby at the local Brighton races; the noble Lord, Lord Burnham, in the owners' enclosure; the noble Lord, Lord Cope, taking the taxes at the end of the run; the noble Lord, Lord Lipsey, counting the pennies for the Tote; and the noble Viscount, Lord Astor, carefully considering the future of the racing industry as we all meet at the winning post. As I said, the debate has been extremely interesting and I have some very powerful images from it.
	We all know that the future of the Tote is of major importance to the racing industry, and of course to those currently working in the Tote. If this evening we do no more than to clarify the situation for them, it will have been time well spent.
	In that context, I should like to comment on the Bill and some of the points made in the debate. I wish first to reiterate that the Government fully recognise racing's legitimate stake in the Tote and wish to work with the industry to ensure that its interests are safeguarded. Indeed, we are already doing exactly that. We have announced that a sale to racing is our preferred option for the Tote. I am pleased that there appears to be consensus among those who have spoken that that is the right way forward, but the detailed terms and conditions of such a sale remain to be determined, not because of any dragging of feet or because of bureaucracy or red tape, but because we feel that there are very important issues to be resolved first. Put simply, no matter how much some people may want it, there is no realistic quick-fix option available. To suggest otherwise would represent serious under-estimation of what is really involved.
	Perhaps the best way to illustrate the situation is to look at the Bill. Where in it are there any references to the Betting, Gaming and Lotteries Act 1963 or to the many provisions therein relating to the operation of the Tote, such as the regulation of horserace pool betting; the terms of the Tote's exclusive licence to operate pool betting; the Tote's powers to authorise others to operate pool betting; the requirement for it to negotiate a separate levy settlement; and finally the fact that its chairman has a guaranteed seat on the Levy Board? All of those issues will need to be addressed in legislation at some later point.
	I could go on. But I hope that I have made my point that there is more to selling the Tote than just taking its assets into public ownership and selling them on to racing. Quite simply, that would be unrealistic and leave the job no more than half done. The Government's requirements, as may be expected, are for a piece of legislation that stands up well to scrutiny and properly addresses all the issues. We are not talking here about the price to be paid for the acquisition of the Tote. It is now well understood that that is to be determined by commercial negotiation in the light of circumstances at the time; that has to be the best way forward. This is not a matter of price; it is a matter of principle. To that end the Home Office is continuing to work closely with racing and the Tote itself to make sure that those issues are satisfactorily resolved. There will be no avoidable delay.
	But resolving some issues may take longer than some of us would like. I am afraid that cannot be helped. Complex matters like the Tote's exclusive licence on the horserace pool betting and its future regulation demand proper consideration. In addition, because the sale of the Tote involves the transfer of a public body to a private one, it raises the question of whether state aid is involved, as has been mentioned by Members of your Lordships' House.
	Our belief is that we can satisfy the European Commission on that aspect of the sale. But there will need to be formal notification. We shall be referring the sale proposal to the Commission shortly, asking it to give the matter the highest priority. It would be premature to legislate in advance of that clearance. In the meantime, the Tote will continue to operate in an efficient and effective way. "Business as usual" will be maintained, and the Tote's profits will, as its popular slogan suggests, remain in racing.
	The Tote is in good hands. Frankly, I am at a loss to see what dire consequences people fear if the sale takes rather longer to finalise than some may have hoped would be possible. We believe it is much better to get it right than to rush it.
	Fears have been expressed that linking the Tote to the abolition of the Levy Board may in itself delay the sale. But the Government's view--shared by the British Horseracing Board--is that there is no persuasive reason why the two should not proceed in parallel and to the same broad timetable. The Government favour a single Bill. The noble Viscount, Lord Astor, said that the Government favour a tidy solution; we feel that that would be in the best interests of the industry and I make no apology for that. Taken together, the sale of the Tote and the abolition of the Levy Board represent a coherent strategy for the Government's withdrawal from direct involvement in the administration and funding of horseracing.
	Although both organisations have evolved over the years, they share the primary purpose of channelling funds from betting into racing. To differing degrees they have had a hand on racing's purse strings. We take the view that racing no longer needs so many helping hands and, as such, it makes eminent good sense to deal with the two issues together. I suggest also that it is in the interests of the racing industry to be able to draw a line under direct government involvement in its funding. If it is to be in command of its own destiny with the ability to plan properly for the future, then we will do it no favours by withdrawing in a piecemeal fashion.
	Having urged racing to adopt a strategic approach, it will make no sense for the Government to do precisely the opposite by treating the Tote as a stand-alone issue. Naturally, if there were to be some significant or unforeseen delay to either one or the other, then we would have to review that approach. But at the moment we do not anticipate having to do so.
	The comprehensive gambling review is now being undertaken for the Government--as I am sure everyone is aware--by Sir Alan Budd and his colleagues. That is running to a longer timetable. But it has never been our intention to postpone the reforms of the Tote and the Levy Board to await its findings. We do not see those things as being inextricably bound up.

Viscount Astor: My Lords, before the Minister leaves that point, can he address the issue of casino legislation? Is that for the longer term or is that for the short term, linked with the Levy Board and the Tote?

Lord Bassam of Brighton: My Lords, we see that more as a medium-term issue. It will greatly benefit that sector. We need to liberalise it; that much is clear. But it is not inextricably linked with the future of the Tote.
	A number of questions were asked during the course of the debate and I shall attempt to address some of them. The noble Viscount, Lord Astor, asked if I could confirm that the Levy Board will be abolished. I can confirm that and believe I have already made that clear. Our decision to do so was announced at the same time as our decision to sell the Tote.
	My noble friend Lord Lipsey made the point of the need for early legislation. We accept that and we are as keen as the current board of the Tote and racing as a whole to see an early sale. That is why we are working closely with all the key stakeholders and carefully consulting them to ensure that we address all the outstanding issues.
	The noble Lord, Lord Burnham, raised the issue of the price to be paid by racing. I congratulate him on that. I welcome his pragmatic approach. I know that he believes very strongly in the approach that the Government are adopting. We feel it is realistic and that it is the best way forward. I want to ensure that we get the issue of principle right and no doubt he will consider our general approach to be correct.
	The noble Viscount, Lord Falkland, raised one of the most important issues this evening; that is, the integrity of racing in the United Kingdom. It goes without saying that our racing industry does have integrity. We are a long way from the race gangs at Brighton racecourse, Brighton Rock, Graham Greene and all those matters. It is because of that that our racing industry is as well supported as it is; why it is still a spectator sport and still attracts great interest. I played some small part in that in promoting the Labour Race Day at Brighton racecourse.

Noble Lords: Hear, hear!

Lord Bassam of Brighton: My Lords, I am pleased with that. It is something we should have more of. I reckon the party that races together works best together.
	We need to hang on to and sustain the integrity of racing and any action that we take, such as the sale of the Tote, must reflect that.
	We have had a very useful debate this evening. I congratulate the noble Viscount, Lord Astor, for the initiative that he has taken. This has been very important for us and it is something that will take us in the general direction of the disposal of the Tote over time. I am not here this evening to give a commitment as regards the timetable in that respect. As I said earlier, this is a matter upon which we need to focus more time and attention so as to ensure that we get it absolutely right. We need to continue the dialogue with the important stakeholders and to conduct our discussions and negotiations with the Commission in Europe.
	I am greatly indebted to the noble Viscount for the constructive tone of his contribution. I am most grateful to him for giving me an advance copy of his notes. The spirit that we have discovered in your Lordships' House this evening will serve us well when we bring forward government legislation at some later stage, the aim of which will be to proceed with the sale and disposal of the Tote to the racing industry, where it should rightly rest.
	I understand that the Bill has been described a number of times this evening as an effective Bill and, perhaps, as a simple Bill to do a simple job. But, unfortunately, when you subject it to any form of objective analysis, I am afraid that the Bill is probably too simple and, regrettably, would only do part of the job required. Indeed, I believe that I made that case earlier. Having said that, I thank the noble Viscount. We have had a most useful and entertaining debate and one which we have all enjoyed. I wish the spirit of the Bill well, if not the Bill itself.

Viscount Astor: My Lords, I am grateful to all noble Lords who have taken part in this debate. I have been asked to apologise on behalf of the noble Lord, Lord Donoughue, who wanted to be here this evening but was unable to do so. He has asked me to say that he would have supported the Bill. His great concern is that he is afraid that the delay in privatising the Tote would damage it commercially at a time of great technological change. While the uncertainty continues, he believes that the Tote will experience difficulty in raising the capital needed to invest in new technology. I believe that that call was echoed on all sides of the House this evening. Indeed, the noble Lord, Lord Lipsey, described it as a "wake-up" call for the Government.
	It is entirely clear that any delay will damage the Tote and its ability to compete. For example, the Tote does not know whether or not it can go offshore. Therefore, it will have difficulty in competing with the bookmakers. Another problem is that it does not know whether it can go on-line and offer on-line betting to international punters. As my noble friend Lord Burnham said, we are not here to argue about who should get the proceeds. We all accept the practical decision that the Home Secretary made, providing that the Tote goes to a racing trust.
	I was interested to hear the Minister describe the Tote as a "public body" and say that, therefore, the sale would have to be referred to the European Commission. I find that interesting because, judging by what we heard this evening, I do not think that anyone really knows whether it is a public body; it is certainly not a government body. We know that the Government do not own it: it seems to be floating around in the middle somewhere. Therefore, until the Government have defined exactly what it is, I do not see how we can approach the Commission on the matter.
	I very much enjoyed the speech of the noble Viscount, Lord Falkland. Indeed, his interest in racing is, as always, wide ranging. I look forward to being with him at Ascot next week. He described the debate that I remember well when the Duke of Devonshire said that he thought the prize money should not go up because he did not see why anyone should subsidise his hobby. The noble Viscount asked why someone should subsidise a yacht, or something like that. At the very least, I hope that the noble Viscount will make some money and that that will subsidise a pair of new mudguards for his motorbike.
	However, seriously speaking, racing does need the money. As has been said, the Tote provides quite a small part of the total money that actually goes to racing, but it is important that we try to fill that gap. I am grateful for the support of my noble friends Lord Burnham and Lord Cope. We are all as one in wanting to see this happen as soon as possible. I can do no better than to conclude the debate with the words of the noble Lord, Lord Lipsey, and say that this is a wake-up call for the Government. I hope that noble Lords will give the Bill a Second Reading.
	On Question, Bill read a second time, and committed to a Committee of the Whole House.

Northern Ireland (Emergency and Prevention of Terrorism Provisions) (Continuance) Order 2000

Lord Falconer of Thoroton: rose to move, That the draft order laid before the House on 22nd May be approved [20th Report from the Joint Committee].

Lord Falconer of Thoroton: My Lords, it may be helpful to your Lordships if I begin by setting this evening's debate in the context of the Government's overall approach to counter-terrorism legislation.
	Noble Lords will be aware that this House is currently considering the Terrorism Bill, which will eventually replace the existing temporary provisions of both the prevention of terrorism Act and the emergency provisions Act. That Bill will, we hope, receive Royal Assent as soon as possible. That, however, leaves us with a gap between 15th June, when the current provisions of the emergency provisions Act expire, and Royal Assent of the Terrorism Bill. The purpose of this order is to renew the temporary provisions for that period.
	Noble Lords will appreciate that, while there has been significant progress in Northern Ireland since the signing of the Belfast agreement, that progress has been slower than we would have hoped. Regrettably, the agreement has not yet brought a complete end to the terrorist threat.
	On both Republican and Loyalist sides, new groupings have emerged determined to destroy the agreement and deny the people of Northern Ireland the chance to build a new and prosperous Northern Ireland. These groups remain small. But sadly their capability is still considerable. The security forces, north and south, continue to use every effort to thwart their attempts to destroy the peace process. This co-operation reflects the determination of both governments to protect the community.
	I pay tribute to the continued courage and commitment of the men and women of the Royal Ulster Constabulary, and to the Armed Forces acting in their support. To their credit both the RUC and Armed Forces have carried out their duties with utmost professionalism during the 30 years of violence but at a very high price.
	We all hope that the security forces never have to lose another life as a result of terrorism. A sign that progress has been made is that 1999 was the first year for 30 years in which no member of the police or Army was killed in Northern Ireland. A further sign is that today a battalion of the paratroops has left Northern Ireland, reducing the number based there to its lowest level since 1970.
	This changing environment means that security policy faces challenges unknown only a few years ago. In the face of a sustained terrorist campaign, the prime need to protect the community from terrorism was widely accepted. Now we need to look both ways. We must and do recognise the very real progress that has been made, and security activity has changed accordingly. Some want this to go further, but we can never forget the forces out there determined to destroy Northern Ireland's chances for peace, who have been responsible at Omagh for Northern Ireland's single worst atrocity of the Troubles.
	But equally, we must ensure that our security policy is always governed by the threat level. The Government have an overriding duty to protect the community from threats, from whatever quarter and in whatever form they come.
	The emergency provisions Act provides the security forces with powers over and above those in the ordinary law. Consequently, it also has important safeguards.
	Independent reviewers provide reassurances to the Government and the public that the powers are used fairly and properly; that persons detained under the terrorism provisions are fairly treated and that both the statutory and administrative safeguards are properly applied.
	This evening's debate is particularly informed by the recent report of Mr John Rowe QC, independent reviewer, on the operation of the Act in 1999. Mr Rowe has concluded that the temporary provisions of the EPA should be renewed in their entirety. The Government share that view.
	There is also a requirement, and a safeguard, that for the provisions to remain in force they must be reviewed and renewed annually by Parliament. That is the business of your Lordships' House today.
	The draft order will continue in force the temporary provisions of the Northern Ireland (Emergency Provisions) Act 1996 from 16th June 2000 until the Act repeals itself on 24th August. However, as I said earlier, the provisions are likely in reality to cease to have effect as soon as the Terrorism Bill becomes law.
	The order will also continue in force Section 4 of the Criminal Justice (Terrorism and Conspiracy) Act 1998; and Parts III and V of the Prevention of Terrorism (Temporary Provisions) Act 1989 in so far as they have effect in Northern Ireland. Together, these provisions provide a wide-ranging package of measures, additional to those contained in the ordinary law, to counter terrorism in Northern Ireland. They have provided a workable legislative framework to allow the police and Army to deter and detect terrorist crime, and to bring those responsible for such crimes to justice.
	The Government recognise and are encouraged that the threat of terrorism in Northern Ireland has diminished significantly. The use of the emergency powers has been greatly reduced to reflect changes in the terrorist threat. We hope and expect the threat to diminish to the point where no special Northern Ireland powers will be necessary. But until such times the provisions are vital to deter and detect terrorist crime and to protect the community. I commend the draft order to your Lordships' House.
	Moved, That the draft order laid before the House on 22nd May be approved [20th Report from the Joint Committee].--(Lord Falconer of Thoroton.)

Lord Glentoran: My Lords, I thank the Minister for laying the order before the House. I agreed with much of what he said. We on this side of the House believe that all parties in Parliament must be united in the fight against terrorism.
	Northern Ireland is experiencing peace of a kind. It is a great statistic that the noble Lord quoted, that not a soldier or policeman was killed in the year 1999. We hope that that will continue.
	However, it is also true that the Province is not peaceful; it is not content; it is not relaxed. The majority of people from all quarters and on all sides, I believe, seriously want peace. However, there are extremists on both sides. Terrorism in Ireland has been a way of life for 30 years. There are those who really cannot bear the thought of giving it up and who are still attempting to persuade others to continue. Therefore, it is absolutely vital that we in this kingdom do not drop our guard.
	In the meantime this Government, quite rightly in my opinion and our opinion, are tidying up the anti-terrorism legislation. They have faced reality. Terrorism--Irish, national and international, whether it be in Ireland, London, the Middle East, on the cybernet, perhaps in years to come in space-- would appear to be here to stay. I hope that the Terrorism Bill that is before this House at the moment will include all the statutory powers that the kingdom needs for protection from terrorism in the future.
	I am not an optimist about living in a peaceful world. The world seems to fragment. Terrorists and those who fight, shout and create nuisance, both with violence and in other ways, still, unfortunately, seem to get their way. It is vital that necessary legislation to protect the nation from terrorism--because we cannot defeat terrorism--is enacted in this House in this Parliament. The Terrorism Bill will replace and tidy up all the prevention of terrorism legislation. However, this order will continue the shield of protection that legislation can provide while the new Terrorism Bill is being enacted and while Ireland is still full of weapons and there are, unfortunately, a few hundred people who are still determined, given the opportunity, to use them. I support this measure.

Lord Falconer of Thoroton: I thank the noble Lord for his support.

On Question, Motion agreed to.

Social Security and Child Support (Miscellaneous Amendments) Regulations 2000

Baroness Hollis of Heigham: rose to move, That the draft regulations laid before the House on 10th May be approved [19th Report from the Joint Committee].

Baroness Hollis of Heigham: My Lords, the regulations amend principally the Social Security and Child Support (Decisions and Appeals) Regulations to which I shall refer as the DMA regulations. They also amend regulations on claims and payments, child support and industrial injuries.
	As your Lordships will be aware, the DMA regulations were made under the powers in the Social Security Act 1998. That Act set up a new decision making appeals system within social security. The regulations provided the detailed framework for an improved decision making and dispute resolution system, a simplified appeal system and the introduction of a modern, accountable appeals service.
	The amendments are purely technical and are intended to make changes to the regulations which will improve customer service. They are based on our experience of live running of the DMA system and are all beneficial to clients. So they are technical and benign.
	The new processes were first introduced into child support on 1st June last year and extended to social security benefits between 5th July and 29th November on a rolling programme. On the whole the new system works well and we are already starting to see fewer cases going to appeal and a reduction in the appeals backlog.
	The regulations break down into three parts: first-tier decision making, appeals, and miscellaneous. The amendments we are making at first-tier are aimed at securing a more efficient and effective management of the new process. The key changes are, first, a clearer definition of "official error". The original definition had caused confusion for clients. More significantly, there was the possibility of customers being penalised where no penalty was intended. Secondly, there are changes to bridge a payment gap when the Secretary of State supersedes a decision on his own initiative. Thirdly, we are regularising the position on supersessions for disability and incapacity benefits in relation to tribunal and commissioner decisions.
	I turn now to appeals. The amendments--which affect the composition of tribunals, striking-out, decision notices and time limits--are all aimed at improving the service for appellants by streamlining the administration of appeals.
	In the final category, the main changes are the tidying up of the decision making process for industrial injury scheme benefits. The amendments are designed to ensure that DMA principles are adhered to and the improvement of the administration of claims when the entitlement is dependent on the award of another benefit. The existing provisions can lead to delays in people receiving their full entitlement. In future, provided people act within a defined time, payment will be made much more promptly and automatically.
	The new decision making and appeals arrangements have already had a positive impact on the way both the agencies and the appeals service handle disputes and appeals. However, there is always room for improvement. I am confident the package before your Lordships tonight will help bring about yet more improvement in the service we give to customers. I hope your Lordships will accept the regulations and I commend them to the House.
	Moved, That the draft regulations laid before the House on 10th May be approved [19th Report from the Joint Committee].--(Baroness Hollis of Heigham.)

Lord Astor of Hever: My Lords, I thank the Minister for explaining clearly the purpose of the regulations. They are not controversial and I am sure that the Minister will be happy to know that we shall not oppose them.
	They were discussed in the Standing Committee on Delegated Legislation in the other place, so I shall be brief and restrict myself to two general questions.
	The Minister mentioned that the regulations reflect the Government's experience of working with the DMA and are designed to deliver better administrative processes and an improved client service. Therefore, how will the Government measure the success of the new procedures? Will they set a date--for example, six months after the passage of the amendments--for some sort of report to be given on the effectiveness or otherwise of the regulations?

Lord Addington: My Lords, I shall be brief. I believe that reading regulations is probably the answer to anybody's insomnia. I have three questions. First, I associate myself with the idea of keeping this matter under review. I do not know whether six months is the right period, but certainly all these matters must be kept under review. Indeed, one hopes that many of the amendments are the result of a continuing process of review.
	Regulation 3 refers to the Social Fund Maternity, Funeral Expenses (General) Regulations 1987. That caught my eye and that of my colleagues. I hope that those regulations have been updated and upgraded. What was the initial figure? When something is set down in legislation it has a nasty habit of staying there for ever. We are all trying to claw back money from the Treasury.
	It was pointed out to me that Regulation 10 seems to have been superseded by the current Bill. Perhaps the Minister will clarify that for me.
	I have a more substantial disagreement. Regulation 25 refers to the change from one-member tribunals to one legally qualified person. That may be a slight improvement but I should like to register the fact that we do not like the idea of one person sitting as a tribunal.

Baroness Hollis of Heigham: My Lords, I am grateful to both noble Lords for their constructive responses to these regulations. As I have already said, they are benign, but because they are technical I am grateful that I have been given a certain amount of notice of these points.
	Perhaps I may respond, first, to the two queries raised by the noble Lord, Lord Astor. He asked how the success of the provisions is to be measured and what forms our evaluation and report will take. He was joined in that request by the noble Lord, Lord Addington. We are evaluating the effect of all the changes that have been made to the provisions covering decision-making during the course of this year. I should say that so far, since we introduced the DMA proposals, the story has been one of good news. The live load of the Appeals Service currently stands at a little over 61,000, down from a load of 140,000 cases in February 1999. Three-quarters of the outstanding cases are under six months old and the average waiting time is 13.7 weeks; that is, under 14 weeks, which is well within the target set by the Secretary of State. In general, the procedures appear to be working very well and are in fact exceeding our expectations.
	However, we shall obviously keep this under review. In discharging his commitments under Section 81 of the Social Security Act 1998, the Secretary of State will report annually rather than every six months on the quality of the decisions taken. We shall take account of the effect of these regulations in that report and, if necessary, note their impact in any particular areas. I believe that covers the two points raised by the noble Lord.
	The noble Lord, Lord Addington, asked about Regulations 3, 10 and 25. Regulation 3 comments in passing on the social fund payments on maternity benefit and funeral benefit. Although the noble Lord has given me notice of his question, he is slightly cheekily using this to raise a wider point than is dealt with in these regulations; namely, to ensure that there is seamlessness between qualifying benefits and succeeding benefits and how those may affect funeral benefits.
	I have not been able to find out what happened long ago as regards funeral benefit, but we know that in 1995, when I served in the Opposition, a limit of £500 was put on funeral directors' expenses. In addition, other legitimate expenses such as the cost of a plot were allowed. In 1997 the figure for the benefit to cover funeral directors' expenses was raised to £600. Other permitted expenses are also allowed. I believe that that demonstrates that we are keeping this benefit under review and that we have raised it rather more generously than the rate of inflation. I hope that that reassures the noble Lord.
	As regards Regulation 10 which covers departures, the noble Lord asked whether those are to be suspended, given the provisions of the current Bill. As he will know, departures in the Bill currently moving through this House are to be replaced by a new scheme of variations. Regulations with respect to variations will be laid before the House for debate in due course. Any details that may concern noble Lords can be discussed at that time.
	The third query on the regulations raised by the noble Lord, Lord Addington, concerned Regulation 25. Again, he has quite understandably used this as a peg on which to raise wider concerns about the success or otherwise of one-member tribunals. The noble Lord will recall from our deliberations on the original DMA Bill that the president of the appeals tribunals deals with their constitution and the appointment of panel members. The chairman of each individual tribunal is always legally qualified. Tribunals are constituted with one member when the issue is only one of legal interpretation. If, however, a matter concerned, for example, with disability benefit arises where an assessment of physical disability is required, a medical specialist would be attached to the tribunal, thus making it a two-member panel. If the tribunal needed to draw upon financial and actuarial experience, a third member with the relevant expertise would be brought in.
	For the nine months for which we have been able to gather statistics--April 1999 to January 2000--a roughly one-third split between three-member, two-member and one-member tribunals were constituted. The child support tribunals largely comprised one member, with male and female lawyers equally represented on them. I asked specifically whether problems had been reported, but I have not been made aware of anything unsatisfactory in the present arrangements for three, two and one-member tribunals. They appear to be working well and we have received no complaints. I had a meeting yesterday with the National Association of Citizens Advice Bureaux on a wide range of issues associated with CSA matters and so on. I am sure that if NACAB had any concerns about one-member tribunals it would have raised them at the meeting. It did not do so; I therefore have no reason to think that the system is working less than well. Indeed, the fact that we are able to speed up the appeals, added to the sharp reduction in the backlog, is a testimonial. However, if noble Lords have any reason to be worried about implementation of these regulations, I am always happy to pursue the matter further.
	I am grateful to noble Lords for their constructive comments, and particularly for giving me notice on the technical issues that were raised. I hope that in the light of my comments, your Lordships will feel able to support the regulations. I commend them to the House.

On Question, Motion agreed to.
	House adjourned at twenty-five minutes before ten o'clock.